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Basic Political Developments
• Itar-Tass: Russian FM, Egyptian leaders to discuss expansion of bilateral ties - Special attention will be paid to the situation in the Middle East in the context of the Palestinian-Israeli settlement, in which Cairo plays an active role. Lavrov will inform his Egyptian colleagues about the talks he had held in Israel and in the Palestinian National Autonomy on June 28-29.
• Reuters: Russia briefs Egypt officials on nuclear plant design - Russia's atomic energy corporation Rosatom is briefing Egyptian energy officials on Russian nuclear power plant technology and design in a two-day workshop, Egypt's energy ministry said on Tuesday.
• News.az: Armenia looking forward to Medvedev’s visit, Armenian ambassador in Russia - Medvedev may visit Yerevan in August.
• RIA: Russia to hold talks with France on purchasing artillery navigation system
• Salehi: Bushehr nuclear plant due to be operational by mid September - Also Russian Consul General Ali Mitkhadovich Mustafabeyli had told reporters in central Iranian city of Isfahan that, the plant needs two months or less to be completed."
• Iranian: U.S., Russia Offer Fuel Talks to Iran - Russia and the United States have offered to hold talks with Iran on the provision of nuclear fuel for its Tehran medical reactor, Foreign Minister Sergei Lavrov said Tuesday.
• RIA: Israel asks for Russian help securing release of Shalit - Israeli Prime Minister Benjamin Netanyahu asked Russia to use its contacts with the Palestinian Hamas movement to secure the release of captive Israeli soldier Gilad Shalit, The Jelrusalem Post and Ha'aretz reported on Wedensday.
• VOR: Netanyahu asks Russia to urge HAMAS to release Gilad Shalit
• Interfax: Yemen president’s visit to Russia could speed up signing of bilateral arms deals - source
• Sabanews: President speaks to Russian media - He made clear that he will also discuss the latest developments in the region, topped by Palestine, Somalia and the African Horn as well as coordinating efforts of the two countries in fighting terrorism and sea piracy.
• RIA: Putin to attend engineering forum, meet with Yemeni president - Russian Prime Minister Vladimir Putin will on Wednesday attend an international engineering forum in the town of Zhukovsky near Moscow, where he will meet with world leaders and executives. Yemeni President Ali Abdullah Saleh and Siemens CEO Peter Loescher are expected to attend Engineering Technologies 2010.
• Itar-Tass: Putin to meet foreign investors at engineering forum
• Premier: Prime Minister Vladimir Putin meets with former President of the United States Bill Clinton - Prime Minister Vladimir Putin expressed his hope that the spy scandal that has recently broken out in the U.S. would not affect relations between Moscow and Washington. “I very much hope that the progress we have recently made in our bilateral relations will not be affected by recent events,” said the Russian prime minister. In his turn, Mr Clinton expressed his support for the new START treaty signed by the leaders of Russia and the U.S.
• Xinhua: Senior Chinese, Russian diplomats hold ministerial talks - Chinese Assistant Foreign Minister Cheng Guoping concluded on Tuesday a four-day ministerial consultations with Russian diplomats. During the talks, Cheng met with Russian First Deputy Foreign Minister Andrei Denisov, Deputy Foreign Minister Alexei Borodavkin and Russian Security Council Deputy Secretary Vladimir Nazarov.
• RenCap: Renaissance Capital's 14th Annual Investor Conference: Russia and China: The new special relationship
• NY Times: At Russia-China Border, Bear Paws Sell Best - But it is bear paws, a ritual dish for the Chinese, that are the most common commodities in this underground market, Mr. Vaisman said. He estimated that thousands were smuggled each year.
• China Briefing: Russia Creates Buzz in China Bilateral Investment
• CharterX: Russia leads the race for new regional jet after engine approval - Sukhoi Civil Aircraft Co., the commercial unit of Russian military plane maker Sukhoi Co., is chipping away at a Canadian-Brazilian duopoly for regional jets after scoring a milestone certification for its SuperJet model.
• Itar-Tass: Third ‘Progress’ spacecraft to go to the International Space Station
• VOR: Russia’s space freighter to be launched to ISS
• BarentsObserver: Floating NPP to be set afloat - The world’s first floating nuclear power plant will be set afloat on Wednesday. The plant will be operational in the Russian Arctic by the end of 2012.
• New Era: Extract allays fears on Rössing South uranium - Developers of Rössing South uranium mine have refuted speculations of uncertainty due to Namibia’s signing of a multi-billion-dollar uranium investment deal with Russia.
• Bellona: Russia’s Atomflot reports ready for long-overdue decommissioning of old icebreakers, nuclear service ships
• Itar-Tass: Policeman wounded in shootout in Dagestan
• Interfax: Group accused of illegal sale of precious metals detained in Moscow (Part 2) - "The group included senior managers and employees of several Moscow banks, heads of jewelry factories and jewelry stores, as well as people who registered and used fly-by-night firms," it said.
• RUSSIAN SPY ARRESTS IN US
o AFP: Spy scandal 'unconvincing and unnecessary': Russian media
o Xinhua: U.S.-Russia Spy Case Irritating but Not Devastating: Analysis
o Reuters: FACTBOX - Major issues, disputes in U.S.-Russia ties
o Reuters: Russia angry as U.S. seeks to limit spy fallout
o Globe and Mail: 'Canadian’ couple in alleged spy ring put down roots in U.S. - Canada a favourite place for Russian 'illegals’ as a staging ground before moving south, former KGB general says
o BBC: Spy row highlights schizophrenic US-Russia ties
o Blogs.telegraph: Russian spy ring: Medvedev's allies blame US politicians for 'Right-wing conspiracy' - Andrew Osborn
o Russia Profile: Tinker, Tailor, Housewife, Spy - Were the Spies Who Operated For Years in American Suburbia Betrayed By a Mole in Their Own Service
Moscow Times: Spy Affair Called Attempt to Discredit Obama
o Bloomberg: ‘Deep Cover’ Spies Worked Day Jobs to Glean Data for Russia
o Telegraph: Russian spy ring: Peruvian journalist among those arrested
o Russia Today: Couple associated with Russian spy ring arrested in Arlington
o Russia Today: US “lobby war” behind Russian spy charges
• RIA: Russian parliament passes bill banning drink-driving outright
• Other Russia to Form Official Political Party - The Other Russia opposition coalition has announced that it will be forming its own political party to participate in upcoming parliamentary elections, Kasparov.ru reports.
• Moscow Times: Moscow Should Not Play by NATO’s Rules - By Alexei Pushkov
• Jamestown: Crisis in Eurasia: Russia’s Sphere of Privileged Inaction - Roger McDermot
• Reuters: PRESS DIGEST - Russia - June 30
o Russian President Dmitry Medvedev on Tuesday criticized leaders of political parties for embarrassingly low attendance at parliamentary sessions, the paper writes.
o Sixty percent of Russian banks are ready to disclose information about their operations to help the Central bank improve the transparency of Russia's banking system, the daily says.
o Russian carmaker Avtovaz, which produces the Lada brand, has launched its own internet television channel, becoming the first non-media company in Russia to do so, the paper reports citing experts.
o Top management of PayPal is in talks with Russian internet payment companies to launch its business in Russia, the paper reports.
o The Mayor of Irkutsk, who caused a shock by defeating Prime Minister Vladimir Putin's ruling United Russia party as a Communist candidate in March elections, has quit the Communists to join Putin's party, the paper writes.
o Two militants were killed in a battle in Russia's restive region of Ingushetia on Tuesday, the paper writes.
o By the end of 2020 Russian specialists will create a prototype of a new super-heavy rocket to carry spaceships and space stations on an orbit, the daily writes.
o The daily runs an interview with Russia's Prosecutor General, Yuri Chaika, who says small and medium businesses in Russia need protection from corruption.
o Twelve teenagers from problem families escaped from a municipal summer camp in Saratov region because they said the conditions were unbearable, the paper reports.
National Economic Trends
• Prime-Tass: Russia’s CBR board OKs keeping refinancing rate at current level
• Interfax: Central Bank decides to leave interest rates unchanged (Part 2)
• Bloomberg: Russia Leaves Main Interest Rates Unchanged, Ends Easing Cycle
• Reuters: Russian rouble flat, local demand supports
• RBC: Russia piles up foreign debt - Russia's foreign public debt increased 11 percent to USD 41.781bn in January-May 2010 from USD 37.641bn as of January 1 of this year. In May alone, foreign public debt slid 0.3 percent, from USD 41.906.7bn as of May 1. At the same time, foreign debt rose 11.3 percent in the first four months of the year, according to the Finance Ministry.
• Bloomberg: Russian May Corporate Loans Grew 1.9%, Most This Year (Update1)
• Izvestiya/Russia Today: Oil prices predicted to fall below minimum
• Russia Today: Euro to remain part of Russia’s reserves
Business, Energy or Environmental regulations or discussions
• Kommersant/Russia Today: Small changes in import regulations - Starting tomorrow, Russians should expect to see some small changes at the customs checkpoints
• Troika Dialog: Federal Grid Company holds AGM
• UralSib: Federal Grid Company: Government continues to increase its stake
• DJ: Alstom: Signs Pact With Transmashholding On EP20 Locomotives
• VTB Capital: Russian Railways suggests tariff discounts for modern fleet
• RIA: Russia's Sberbank plans to become top Ukrainian bank - chairman
• UralSib: RusHydro: Ukranian hydro generation assets in focus
• Steel Guru: Russia to spend over USD 3 billion on port infrastructure
• Ottawa Citizen: Molson Coors targets Russia with Silver Bullet
• Israeli Diamond: EU Court Weighs In on De Beers, Alrosa Diamond Dealing
• RenCap: Renaissance Capital's 14th Annual Investor Conference: Russian utilities panel
• RenCap: The relative demise of the dollar as funding currency of choice in favour of local markets
Activity in the Oil and Gas sector (including regulatory)
• UralSib: Tax holidays for Eastern Siberia are over
• IranOilGas: Caspian Sea oil developments to be regulated - Azerbaijan, Kazakhstan, Russia, Turkmenistan and Iran will sign a document to regulate offshore oil exploitation and protect environment at the Caspian Sea, said a Kazakh official.
• Businessinsider: Mega Profit Tax Makes It Even Worse To Drill In Russia
• Alfa Bank: Rosneft CEO's contract expires but no replacement announced
• UralSib: Surgutneftegas: Key takeaways from AGM
Gazprom
• IranOilGas: Russia's Gazprom Neft eyes Iran oil project - Gazprom Neft is keen to conclude preliminary talks to develop the Iran’s Anran block’s oilfields (Azar & Changouleh) by the end of this summer.
• APA: Russian energy giant to participate in Africa’s oil production
• AlaskaDispatch: Alaska's futuristic pipeline is on a wild ride - On Friday, Russia-based energy giant Gazprom reiterated its interest in Alaska, and specifically in the Denali Project, following a presentation to shareholders. But whether Gazprom is formally in the works as a potential partner is anybody's guess.
• Bne: Ukraine to insist on control in Naftogaz/Gazprom merger - Ukraine will insist on a controlling stake in any interstate joint-ventures in strategic sectors says Fuel and Energy Minister Yuriy Boiko, according to Interfax. The statement suggests renewed resistance to Russia's bid to gain a foothold in Ukraine's gas transport system, as well as the country's nuclear industry.
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Full Text Articles
Basic Political Developments
Itar-Tass: Russian FM, Egyptian leaders to discuss expansion of bilateral ties
30.06.2010, 07.43
CAIRO, June 30 (Itar-Tass) - Russian Foreign Minister Sergei Lavrov will meet Egyptian leaders on Wednesday to discuss expansion of bilateral cooperation and the Palestinian-Israeli settlement.
The Russian foreign minister will be received by President Hosni Mubarak. Lavrov will meet the League of Arab States Secretary-General Amr Musa after that. A day earlier, on Wednesday, Lavrov had held talks with his Egyptian opposite number Ahmed Abdul Gheit.
Special attention will be paid to the situation in the Middle East in the context of the Palestinian-Israeli settlement, in which Cairo plays an active role. Lavrov will inform his Egyptian colleagues about the talks he had held in Israel and in the Palestinian National Autonomy on June 28-29.
After his meetings in Jerusalem, Lavrov said that Russia considered the Middle East ‘quartet’ to be a useful mechanism, which is definitely insufficient at this stage. In this connection, the Russian minister said that an agreement had been reached to expand contacts with an appropriate committee of the League of Arab States on developing the Arab peace initiative. He also confirmed Moscow’s position to continue a dialogue with the HAMAS Islamic resistance movement. Moscow is doing the right thing when it contacts HAMAS to advance the positions of the ‘quartet’ and the entire world community, Lavrov said.
“We began maintaining contacts with this movement after a considerable part of the Palestinians voted for them in elections. In the course of all our contacts we’ve been trying to persuade HAMAS to accept the PLO platform. Certain shifts have been made,” Lavrov stressed.
Lavrov spoke about the need to step up economic development of Gaza, which is going to be impossible without everyday contacts with HAMAS. “The process is complicated but if we don’t tackle this issue, we are unlikely to achieve results,” the Russian foreign minister added.
Lavrov and Egyptian leaders will also discuss the implementation of the Treaty on Strategic Partnership, which provides for the development of interaction in foreign policy between the two countries, especially in regional matters.
Promising projects in trade, economic and other spheres will be vital topics for discussion.
“Despite the world financial crisis, the indicators of the Russian-Egyptian ties haven’t decreased. Egypt continues to be Russia’s leading partners in the region in terms of trade and tourism,” Russian Foreign Ministry’s spokesman Andrei Nesterenko stressed.
Sergei Lavrov and Amr Musa will discuss practical launch of the mechanism of the Russian-Arab cooperation forum. Its task is to expand the range of multi-dimensional interaction between Russia and the Arab world.
In the meantime, the president of the Russian Autonomous Republic of Tatarstan, Rustam Minnikhanov, believes that Russia, and Tatarstan in particular, have good prospects for developing ties with the Arab Muslim world.
“Everything that we do today to develop contacts with the Islamic world has a big future. The Russian leadership understands this, and gives support to these undertakings in every possible way,” Minnikhanov said at a reception in the Kazan Kremlin, which was given on Tuesday in honor of the ambassadors of Kuwait, Saudi Arabia, Bahrain and Russia. They had attended the 11th International forum of Islamic business and finance in Kazan.
Tatarstan cooperates with 42 members of the Organization of the Islamic Conference. The republic’s annual trade turnover with the Islamic world has increased from 93 million to three billion dollars in recent years. That accounts for 23% of the republic’s foreign trade volumes.
At the same time, President Minnikhanov said that Tatarstan should upgrade its relations with Muslim countries and bring them to a qualitatively new level.
“ I agree that it’s necessary to develop trade and economic relations, make investments in Russia’s economy, develop cultural and scientific ties and find points of contact in developing tourism,” said Kuwait’s Ambassador to Russia, Nasser Hadji Ibrahim Al-Muzayan.
Kazan, the capital of Tatarstan, will host the third forum of Islamic business and finance in 2011.
Reuters: Russia briefs Egypt officials on nuclear plant design
Wed Jun 30, 2010 7:02am GMT
CAIRO (Reuters) - Russia's atomic energy corporation Rosatom is briefing Egyptian energy officials on Russian nuclear power plant technology and design in a two-day workshop, Egypt's energy ministry said on Tuesday.
Egypt has said it wants to build four nuclear power plants by 2025, with the first to start operating in 2019. Russia's trade minister said in March his country would bid in Egyptian nuclear power plant tenders.
The workshop, which began on Tuesday, included more than a dozen Russian experts, the ministry's website cited Electricity and Energy Minister Hassan Younes as saying.
"This workshop comes within the framework of the ministry's plan to acquaint itself with all available nuclear technology before offering an international tender to build nuclear plants," the statement said.
Officials say Egypt's combined oil and gas reserves will last the most populous Arab country only three decades, pushing it to seek alternative energy sources, including nuclear and solar.
Last month Bangladesh said its atomic energy commission had brought in Rosatom to help it build two nuclear reactors by 2015.
News.az: Armenia looking forward to Medvedev’s visit, Armenian ambassador in Russia
Wed 30 June 2010 | 07:32 GMT
Armenian Ambassador Extraordinary and Plenipotentiary in Russia Oleg Yesayan said Armenia is looking forward the visit of Russian President.
Medvedev may visit Yerevan in August.
“After the recent meeting of presidents in St.Petersburg, the Armenian side stated that it has received the agreement of Russian President Dmitri Medvedev and the state visit of the Russian president will be held. I think it will be held in the nearest future and my country is looking forward this meeting. I think this visit will be a new stage of development of the Armenian-Russian relations”, Yesayan said in his interview to Ekho Moskvy radio station.
Armenian and Russian Presidents Serzh Sargsyan and Dmitri Medvedev met in the second half of June within the framework of the International Economic Forum held in St.Petersburg.
He said considering the level and nature of the Armenian-Russian relations, the single system of bilateral cooperation covers all spheres of cooperation. “These are economy, policy, culture, military and political sphere, regional and international policy. Naturally, all these issues will be on the agenda of talks”, Yesayan said.
The ambassador voiced hope that such issues as the problem of the Karabakh conflict settlement based on international law, bilateral economic and political issues, issues related to participation of the two countries in the activity of regional and international organizations and possible Armenian-Turkish resolution will also be considered.
“That is, we will discuss important and principal issues of our foreign policy”, said Yesayan.
News-Armenia
RIA: Russia to hold talks with France on purchasing artillery navigation system
09:47 30/06/2010
The Russian Defense Ministry will hold talks during an international engineering forum near Moscow with France's Sagem Defense Securite on the possible purchase of a Sigma 30 inertial navigation system.
The Engineering Technologies International Forum 2010 will be held from June 30 through July 4 in the town of Zhukovsky, 40 kilometers southeast of Moscow.
Earlier this month, Russian Deputy Defense Minister Vladimir Popovkin invited the French-based Sagem company (SAFRAN group), a European leader in defense and consumer electronics, for talks in Moscow.
Popovkin said Russia is interested in purchasing the Sigma 30 artillery navigation and pointing system as part of efforts to modernize its Smerch and Grad multiple rocket launchers.
"We are ready to offer Russia the Sigma 30 system for the modernization of the Russian artillery and multiple rocket launchers," a Sagem spokesman told RIA Novosti.
He said Sagem delivers Sigma systems to a wide range of Russian military manufacturers, including Sukhoi.
"There is a demand for the latest navigation and pointing systems because the firing range of the modernized multiple rocket launchers like the Grad has risen from 40 to 50-60 kilometers and fire control systems therefore also need to be modernized," the spokesman said.
The Sigma 30 artillery navigation and pointing system is designed for high-precision firing at short notice.
PARIS/MOSCOW, June 30 (RIA Novosti)
Salehi: Bushehr nuclear plant due to be operational by mid September
Service: Nuclear Energy
1389/04/09
06-30-2010
09:49:03
News Code :8904-04474
Service: Nuclear Energy
TEHRAN (ISNA)-The Head of Atomic Energy Organization of Iran (AEOI) Ali Akbar Salehi said Bushehr nuclear power plant is due to be operational by mid September.
"God willing, Bushehr nuclear plant is due to be run by mid September," he told reporters.
"We are satisfied with cooperation with Russians and now 3000 experts from the country are working in the plant."
"The power plant is undergoing the last phase of its final test delayed for two weeks, but it is natural."
"Bushehr is a site which can involve some power plants," he added.
Salehi continued, "the facility needs 1.5 billion dollars to be built."
Salehi explained that new sanctions do not have an impact on launch of the power plant, adding, "imposition of sanctions does not have an impact on Iran and we continue our activities."
Also Russian Consul General Ali Mitkhadovich Mustafabeyli had told reporters in central Iranian city of Isfahan that, the plant needs two months or less to be completed."
Russia started construction of the power plant in 1994, it was going to be run in 1999, but is has been delayed for several times.
End Item
Iranian: U.S., Russia Offer Fuel Talks to Iran
Boomberg The Moscow Times
29-Jun-2010
Russia and the United States have offered to hold talks with Iran on the provision of nuclear fuel for its Tehran medical reactor, Foreign Minister Sergei Lavrov said Tuesday.
Iran wants to enrich uranium to the 20 percent concentration needed for a reactor because it hasn’t been able to get imported fuel, Lavrov told reporters in Jerusalem.
Iran said Tuesday that it would continue to enrich uranium to 20 percent for the reactor, though only when needed. The United Nations
Security Council on June 9 imposed a fourth round of sanctions on Iran over its nuclear development.
“I very much hope that Iran will agree to this and this will give an opportunity to prevent the deterioration of the situation,” Lavrov said.
Russia and the United States consulted the UN’s International Atomic Energy Agency before proposing the negotiations, which are aimed at eliminating the need for Iran to enrich its own uranium, he said.
The Security Council left open the possibility of diplomatic talks to resolve the impasse over Iran’s nuclear program after imposing the latest sanctions. Iran rejects allegations that the atomic work may be hiding a weapons program, saying the technology is for civilian purposes such as power generation and the production of medical isotopes. It has rebuffed Security Council demands to suspend uranium enrichment.
RIA: Israel asks for Russian help securing release of Shalit
09:01 30/06/2010
Israeli Prime Minister Benjamin Netanyahu asked Russia to use its contacts with the Palestinian Hamas movement to secure the release of captive Israeli soldier Gilad Shalit, The Jelrusalem Post and Ha'aretz reported on Wedensday.
The papers said the request was made during a meeting on Tuesday between Netanyahu and Russian Foreign Minister Sergei Lavrov in Jerusalem.
Lavrov, who is conducting a tour in the Middle East from June 28-30, said earlier on Tuesday that Russia was prepared to maintain its contacts with Hamas since the majority of Palestinians voted for the movement in "free and democratic" elections.
Israel Defense Forces Soldier Shalit was seized in June 2006 by Palestinian militants while on patrol near the Gaza Strip.
The Palestinians have demanded the release from Israeli prisons of nearly 1000 of their men in exchange for Shalit. Negotiations came to a halt in early 2010.
The two largest Palestinian factions, Hamas and Fatah, split in June 2007, some 18 months after Hamas won Palestinian parliamentary elections in 2006. In the ensuing armed clashes between the two rival parties, Hamas took control of the Gaza Strip and pushed the ruling Fatah movement out of the enclave.
Russia, along with the United States, the United Nations, and the European Union, is a member of the Middle East Quartet, which mediates peace efforts in the region. The Quartet last met in Moscow in March.
Israel considers Hamas a terrorist organization and opposes contact with the movement.
During his visit to Israel, the Russian foreign minister also held talks with President Shimon Peres, Foreign Minister Avigdor Lieberman, Defense Minister Ehud Barak and Parliamentary Opposition Leader Tzipi Livni.
Lavrov later met with Head of the Palestinian National Authority Mahmoud Abbas in Ramallah in the West Bank, before flying to Egypt for the final leg of his tour.
TEL AVIV, June 30, (RIA Novosti)
VOR: Netanyahu asks Russia to urge HAMAS to release Gilad Shalit
Jun 30, 2010 09:39 Moscow Time
Prime Minister Binyamin Netanyahu of Israel has asked Russia to work connections and urge HAMAS to release the Israeli soldier Gilad Shalit who was taken prisoner during Israel’s special operation on the Gaza border back in 2006.
Netanyahu made his request during his meeting with the Russian Foreign Minister Sergei Lavrov in Jerusalem recently.
Earlier Lavrov reiterated that Russia would continue cooperation with HAMAS since the movement has come to power through election.
10:43
Yemen president’s visit to Russia could speed up signing of bilateral arms deals - source
Sabanews: President speaks to Russian media
| |
[29/June/2010]
MOSCOW, June 29 (Saba)- President Ali Abdullah Saleh described on Tuesday the Yemeni-Russian relations as distinguished and growing, affirming concern of Yemen to reinforce these mutual relations to serve interests of the two countries.
Speaking to the Russian media upon arrival to Moscow, Saleh expressed pleasure to meet the Russian leadership to thrash out with them cooperation ties in all fields.
He made clear that he will also discuss the latest developments in the region, topped by Palestine, Somalia and the African Horn as well as coordinating efforts of the two countries in fighting terrorism and sea piracy.
President Saleh valued the supportive stance of Russia for Yemen's revolution, unity, security and stability.
He renewed welcome for the Russian investment in all fields, affirming the provision of the needed encourage and care to guarantee their success.
AMAM
Saba
RIA: Putin to attend engineering forum, meet with Yemeni president
02:32 30/06/2010
Russian Prime Minister Vladimir Putin will on Wednesday attend an international engineering forum in the town of Zhukovsky near Moscow, where he will meet with world leaders and executives.
Yemeni President Ali Abdullah Saleh and Siemens CEO Peter Loescher are expected to attend Engineering Technologies 2010.
The forum will run from June 30 to July 4. It will show the capabilities and prospects of Russia's machine-building industry.
Some 25 conferences and round tables that will involve over 1,500 delegates from Russian and foreign companies will be held.
Yemen's participation is not accidental: 90% of military hardware in the Yemeni armed forces was made in the former Soviet Union, and the country's air force's fleet consists of Soviet-made aircraft.
Vyacheslav Dzirkaln, a deputy director of Russia's Federal Service on Military and Technical Cooperation, told RIA Novosti in early June that contracts on the supplies of Russian armored vehicles, small arms and ammunition to Yemen are implemented as planned.
Many industrial and social facilities in southern Yemen were built with support from the Soviet Union.
Russia also delivers humanitarian aid to Yemen, whose leadership fights al Qaeda militants and has to deal with Shiite rebels in the north and separatists in the south.
A recently agreed aid package includes tents, mobile power plants, blankets, canned food and sugar.
MOSCOW, June 30 (RIA Novosti)
Itar-Tass: Putin to meet foreign investors at engineering forum
30.06.2010, 03.40
MOSCOW, June 30 (Itar-Tass) - Russian Prime Minister Vladimir Putin will participate in the work of ‘Technologies in Engineering 2010’ international forum on Wednesday, June 30. The town of Zhukovsky near Moscow will host the event for the first time, the government press service reports.
Putin is expected to attend a plenary meeting that will focus on urgent problems of Russian engineering and prospects of its development. “Special attention will be paid to cooperation with foreign partners, ways of increasing the investment potential of Russian engineering and technological exchanges, the press service went on to say.
Putin will see the products of domestic producers and will visit a show of Russian machinery both of military and civilian designation.
29 June 21:08
Premier: Prime Minister Vladimir Putin meets with former President of the United States Bill Clinton
Prime Minister Vladimir Putin expressed his hope that the spy scandal that has recently broken out in the U.S. would not affect relations between Moscow and Washington. “I very much hope that the progress we have recently made in our bilateral relations will not be affected by recent events,” said the Russian prime minister. In his turn, Mr Clinton expressed his support for the new START treaty signed by the leaders of Russia and the U.S.
Transcript of the beginning of the meeting:
Vladimir Putin: Bill, I'm happy to see you in Moscow. We've known each other for ages, and we've had a good relationship over the years.
I know that you've come here to make a speech at the international investment conference. I hope to see you here more often.
You've chosen the right time to come to Moscow. I hear your police have gotten carried away and put people in jail...
(Clinton laughs.)
But that's their job after all; really, they are all just doing their job.
I very much hope that the progress we have recently made in our bilateral relations will not be affected by recent events. And we very much hope that those who value relations between Russia and the U.S. understand this, even in this situation.
On the whole, our relations have been improving. I mean the economy in particular. Naturally, there was a setback because of the global recession, which I discussed with you when we met in Davos.
I know you're watching closely what's happening in the global economy, and you have a professional opinion on economic issues. I think we'll have an interesting meeting today, an interesting conversation.
Bill Clinton (as translated): Thank you. I'm happy to be here. Thank you for your warm welcome. I'm confident that the relations between the U.S. and Russia will improve. I have asked the U.S. Embassy several times to do their best to help Russia become the member of the WTO. I have a very positive opinion of the agreement on nuclear weapons. And I think President Medvedev has had a good meeting in America. I'm happy that you invited me through my wife to visit the Arctic and Bear Island (Alexandra Land in Franz Josef Land). I'd love to visit it.
Vladimir Putin: Yes, to work with polar bears. This is quite possible. We can discuss this today.
Xinhua: Senior Chinese, Russian diplomats hold ministerial talks
2010-06-30 14:20:01
MOSCOW, June 30 (Xinhua) -- Chinese Assistant Foreign Minister Cheng Guoping concluded on Tuesday a four-day ministerial consultations with Russian diplomats.
During the talks, Cheng met with Russian First Deputy Foreign Minister Andrei Denisov, Deputy Foreign Minister Alexei Borodavkin and Russian Security Council Deputy Secretary Vladimir Nazarov.
Both sides acknowledged the increasing significance of enhancing China-Russia strategic partnership of cooperation against the backdrop of complicated international situations, as both countries were in a vital period of development.
The diplomats pledged to implement consensus reached between the two countries' leaders, and promised to hold a series of exchanges in the second half of this year.
They also vowed to further deepen practical and strategic cooperation between the two countries in all sectors, and push forward bilateral strategic partnership of cooperation.
On the situation in the violence-hit Kyrgyzstan, both sides agreed that China and Russia, as Kyrgyzstan's neighbors, would help the Central Asian nation restore peace as soon as possible together with other countries in the region.
RenCap: Renaissance Capital's 14th Annual Investor Conference: Russia and China: The new special relationship
Renaissance Capital
June 30, 2010
Event: During a panel session entitled Russia and China: The new special relationship, at Renaissance Capital's 14th Annual Investor Conference, participants touched on the following topics:
• The vice president of overseas operations of Acron Holding, Dmitry Goloubkov, described the company's experiences with its Chinese subsidiary, Hongri Acron. Acron Holding feels comfortable with the Chinese market, but sees significant cultural differences between Russian and Chinese partners.
• Shuli Hu, editor-in-chief of Caixin Media, identified three levels of Russia-China relationships. At the government level, the countries both support the increasing influence of the IMF and the World Bank. At the corporate level, Chinese companies know very little about the Russian way of doing business. As for the public, the Chinese - especially the older generation - have warm feelings for the Russians.
• Mike Sursock, former CEO of KKR Capstone Asia, sees Chinese businesses as essentially pragmatic. To achieve success, companies not only have to follow the law, but also need to have to have good relationships with the local and national governments, and with customers.
• Ashley Alder, CEO of Herbert Smith Asia, and Mohan Datwani, general counsel and chairman's assistant at Mongolia Energy Corporation, noted the great potential of the Hong Kong Stock Exchange (HKSE), which aims to become the number-one international stock exchange for developing markets within three years. However, the HKSE has competition from the Shanghai Stock Exchange, where most Chinese companies are listed.
• Jeremy Xiao, president of Cinda Capital, said that Chinese companies are interested in Eastern Siberia. The main project China is involved in now is the Russia-China oil pipeline, to be launched in 2011.
June 29, 2010
NY Times: At Russia-China Border, Bear Paws Sell Best
By ANDREW E. KRAMER
BLAGOVESCHENSK, Russia — It was a routine arrest, warranting only a brief mention in the local newspaper, Amur Pravda. Customs agents, suspicious of a woman’s bulky clothing, discovered she had tape wrapped around her torso.
Removing it, they found the contraband: several large, furry bear paws.
Closed for decades, the border between Russia and China has been creaking open in recent years, allowing more trade and travel but also clearing the way for a peculiar cross-border criminal enterprise in animal parts for Chinese medicine and cooking.
“It is very widespread just now,” Aleksei L. Vaisman, a senior coordinator for Traffic Europe-Russia, a group sponsored by WWF that monitors trade in wild animals, said of the illicit trade in animal parts in the Far East.
Not only bear paws but also bear gallbladders — highly valued for their medicinal and aphrodisiac qualities — frogs, tiger bones, deer musk and the genitals of spotted deer are smuggled daily into China.
But it is bear paws, a ritual dish for the Chinese, that are the most common commodities in this underground market, Mr. Vaisman said. He estimated that thousands were smuggled each year.
While illegal and, to most people perhaps, offensive, the traffic apparently poses no threat to the robust Siberian population of Russian brown bears, a relative of grizzlies, which is rising despite the paw trade.
The real problem with the bear paw trade, the authorities say, is that it creates smuggling channels for two other species — the Amur tiger and the Far Eastern leopard — that are highly endangered. Experts put the population of wild Amur tigers at 450, with about 30 poached each year. Only about 40 of the leopards remain in the wild.
Those channels come in many forms, and are growing busier every year, experts say. Hidden under scrap metal in trucks, slipped across the frozen Amur River in the winter or stuffed amid clothes in suitcases and carried by stony-faced smugglers, the bear paws find their way to China despite the best efforts of the Russian authorities.
On Feb. 8, Russian border patrol agents stopped two trucks carrying 447 bear paws in the village of Leninskoye, just a few miles from the Chinese border, and arrested two Russians and a Chinese national. The cargo weighed 515 kilograms, or 1,133 pounds.
Here in Blagoveschensk, it is not hard to find bear paws for sale; a casual inquiry at a meat counter can make the connection.
A saleswoman’s tight-eyed, suspicious stare greets customers at one dingy meat market. Under frosted glass lies an assortment of sausages, beef cutlets, frozen chickens and game meat — musk deer venison, bear dumplings, wild boar. This, of course, is not where the real money is made. “Call that number on the wall,” the saleswoman says, pointing to a bulletin board.
Soon, in the darkened interior of a parked Lexus sport-utility vehicle, a bear paw deal is going down. “Volodya, hi, do you have any paws?” a broker says into his cellphone. “I have a guy who wants paws.” No luck.
“Sasha, hi, do you have any paws?” he asks another source. “No, somebody just wants to look.” A pause. “Great, we’ll be there tomorrow.”
The rendezvous is set for a ramshackle building beside a potholed road on the outskirts of Blagoveschensk. The hunter pads into a back room, pops open a freezer and reveals the goods: four gnarled, frozen paws.
The paws come from bears killed legally by hunters and also by poachers. But because any export of paws is illegal, the entire trade is banned, Yuri N. Privalov, the minister of natural resources for the Amur region, said in an interview. He conceded that the illicit trade was thriving all the same.
Efforts to stanch the traffic run up against the powerful lure of quick money or, experts say, a man’s need to slake an alcoholic thirst — though seemingly only in a Siberian village would this seem an easy way to get a drink.
“A guy has nothing to do in a village,” explained Oleg V. Lezin, the owner of a taxidermist shop in Blagoveschensk. “He takes a dog and tracks down a bear in the forest, kills it and chops off the paws. He can sell those paws for 1,500 rubles a kilogram. Then he comes into town and gets something to drink, and he’s all right until the next bear.” Those 1,500 rubles would be worth about $50.
The paw trade has damaged hunting traditions with deep roots in Siberia, the taxidermist said, turning a hallowed male winter ritual into a mercantile exercise. Traditionally, Russian bear hunters would find a den burrowed into the roots of a cedar tree, gingerly approach and take a position on the opposite side of the tree from the opening. Then they would make a clamor, or throw in a burning plastic bag. When the bear scrambled out, snorting and angry, the hunters would lean around the tree and shoot it.
But now, he said, many Russians simply hunt at night from trucks equipped with spotlights.
A few years back, according to Roman A. Chikachov, a game warden in Blagoveschensk, Russian hunters took to passing off the more common wild boar gallbladders as bear gallbladders. Once they discovered this ruse, the Chinese buyers, already suspicious, became far more cautious in their dealings. The Russians, he said, are still scratching their heads over how the Chinese were able to tell the two apart.
China Briefing: Russia Creates Buzz in China Bilateral Investment
Jun. 30 – The Russia-China bilateral event held by Dezan Shira & Associates in Beijing last night was completely full with over 100 delegates present to listen to presentations about the state of the Russian economy and the potential for China based businesses to invest in bilateral trade.
The event, held to mark the official launch of Russia Briefing magazine, was hosted by Chris Devonshire-Ellis, principal of Dezan Shira & Associates.
Presentations were given by the trade commissioner of the Russian embassy, Dr. Sergey S. Tsyplakov, who remarked that the Russian economy had weathered the global financial crisis remarkably well, and that GDP growth and FDI figures were getting back on track after a slow 2009. Russia’s far east possesses significant quantities of the total global reserves in oil, gas and coal, and Tsyplakov said that predictions for a huge increase in China-Russian bilateral trade seemed consistent with the general views held by businessmen familiar with the situation. Annual bilateral trade with China had been US$39 billion in 2009, he stated, and is predicted to nearly double in the next three years.
Ulf Schneider, the managing partner for Russia Consulting in Moscow, then gave a presentation of various China invested projects in Russia, including the new Baltic Pearl development in St. Petersburg, a massive, US$1.5 billion property project funded by Shanghai-based businesses, and the Huaming Park in Moscow, a large trade and retail center. Russian infrastructure is also improving with the proposed new Sukhoi 100 passenger jet set to roll off the production lines later this year and new bullet train links between Moscow and St. Petersburg, using the same technology as the recently opened Guangzhou-Wuhan rail line.
Mr. Schneider also noted the similarities in legal structures between China and Russia, outlining details of Russian representative offices, branch offices and wholly foreign-owned businesses, as well as introducing elements of the Russian tax system. Stating that individual income tax was just 13 percent, profits tax has been reduced to 20 percent and staff welfare was both capped and at a rate of 26 percent of salary, he noted that the investment environment in Russia was now very attractive, approaching that of quasi tax havens. Explaining that cities such as Moscow actually have a higher density of population than Beijing, Schneider pinpointed the new Russian consumerism and infrastructure development projects as potential targets for foreign investors to consider.
The event was rounded off by a presentation from the Wang Chunping, the trade and investment officer for the government of Manzhouli, China’s border city with Russia some three hours north of Beijing. Nearly 60 percent of all Sino-Russian trade passes through the city, making it China’s busiest inland port city.
Commenting on Russia, Chris Devonshire-Ellis summarized the opportunities for China based businesses as being focused on selling to the increasingly wealthy urban Russian market, as well as processing commodities from Russia for resale in China and the rest of Asia. The evening then proceeded with a well attended networking event.
CharterX: Russia leads the race for new regional jet after engine approval
30-Jun-2010
By Richard Weiss
Sukhoi Civil Aircraft Co., the commercial unit of Russian military plane maker Sukhoi Co., is chipping away at a Canadian-Brazilian duopoly for regional jets after scoring a milestone certification for its SuperJet model.
The engine for the SuperJet, Russia’s first major passenger airplane project since the collapse of the Soviet Union in 1991, was certified June 23 by the European Aviation Safety Agency. Russia’s Avia Register is set to follow “within a few weeks,” said PowerJet, the company selling the engine. Certification includes tests for safety, noise and emissions.
The approval brings the SuperJet, which can carry 75 to 95 passengers, one step closer to challenging Brazil’s Empresa Brasileira de Aeronautica SA and Canada’s Bombardier Inc. as the only builders of regional jets. Certification for the plane may follow later this year, with three prototypes already accumulating thousands of hours of test flights, EASA said.
“From what we know today, the plane can still get certification this year,” Norbert Lohl, certification director at EASA, said at a ceremony in Cologne on June 23.
Bombardier filed for certification of its CSeries jet that seats 100 to 149 passengers with EASA at the beginning of the year, and Embraer filed for a competing plane this year, Lohl said. The process typically takes about five years, he said. Bombardier targets entry into service for 2013. The SuperJet may include a stretch version with up to 118 seats.
Crowded Field
Mitsubishi Heavy Industries Ltd. of Japan and a planemaker from China may also file for certifications for similar sized planes with EASA in the foreseeable future, Lohl said, bringing the number of models competing in the same segment to five.
The SuperJet is “three to four years” ahead of competitors, Snecma Chief Executive Officer Philippe Petitcolin said at the event. Safran SA’s Snecma, together with Saturn NPO of Russia, makes the SaM146 engine for the SuperJet.
Some 13 engines will be produced this year, with as many as 50 following next year, Petitcolin said, reflecting the current order level of 122 planes for the SuperJet. Sukhoi has said it plans to sell at least 1,800 of the new jets over 20 years.
Sukhoi Civil Aircraft, in which Italy’s Finmeccanica SpA owns 25 percent, is scheduled to deliver the first three SuperJets this year to Russian carrier OAO Aeroflot and Armenian airline Armavia, Sukhoi CEO Mikhail Pogosyan said in June. Fifteen SuperJets are scheduled for delivery in 2011, he said.
Itar-Tass: Third ‘Progress’ spacecraft to go to the International Space Station
30.06.2010, 05.49
MOSCOW, June 30 (Itar-Tass) - A third Russian spacecraft will lift off to the International Space Station (ISS) from Baikonur on Wednesday.
A source at Roskosmos, the Federal Space Agency, told Itar-Tass that ‘Progress M-06M’ would be launched at 19:35 Moscow time.
The spacecraft will deliver about 2.5 tons of various cargoes to the ISS, including fuel and special equipment for the station, oxygen, water, clothes and food for the astronauts as well as gifts and parcels from their relatives.
This time psychologists have sent five DVDs with feature films and video journals on fishing, fresh copies of magazines and reproductions of the pictures of Russian landscape painters for interior decoration to the ISS.
VOR: Russia’s space freighter to be launched to ISS
|Jun 30, 2010 10:26 Moscow Time |
The Russian space cargo ship Progress will be launched toward the International Space Station (ISS) later on Wednesday, officials said, adding that the launch will be carried out from the Baikonur space center in Kazakhstan.
Due to dock with the ISS on July 2, the freighter will deliver fuel, oxygen, scientific equipment, video and photo equipment, containers with food and water plus parcels for the ISS crew.
BarentsObserver: Floating NPP to be set afloat
2010-06-29
The world’s first floating nuclear power plant will be set afloat on Wednesday. The plant will be operational in the Russian Arctic by the end of 2012.
The solemn ceremony marking the launching of the plant will take place at the Baltic shipyard in St. Petersburg on Wednesday June 30, reports the press office of Russia’s State nuclear Agency Rosatom.
After put on sea, the floating nuclear power plant, named Akademik Lomonosov, will be completed and undergo different stages of testing before it will sail to the north during the autumn 2012.
The construction of Russia’s first floating nuclear power plant started at the Sevmash yard in Severodvinsk in April 2007, but in August 2008 Rosatom transferred the assignment to the Baltiiskii Yard in Sankt Petersburg. Before Christmas last year BarentsObserver reported that transfering the construction from Severodvinsk to St. Petersburg did not bring progress to the project.
Last year, Rosatom and Russia’s Far Eastern Republisc of Yakutia signed an agreement for implementing investments to build four floating nuclear power plants for use in the northern coastal areas of the Siberian Republic.
After completion at the Baltic shipyard in St. Petersburg, the plant will be towed out of the Baltic Sea and all the way along the coast of Norway before sailing into the Arctic waters to their ports in Yakutia.
When the plants need maintance and change its highly radioactive spent nuclear, normally after 4-5 years, it will be towed back to Murmansk or Arkhangelsk regions. Today, spent fuel can be transferred either at a naval yard on the Kola Peninsula or in Severodvinsk, but it could take plant at the civilian Atomflot base, outskirts Murmansk. From Atomflot, spent nuclear fuel is shipped by train to the Mayak reprocessing plant in the South-Urals.
New Era: Extract allays fears on Rössing South uranium - by Desie Heita
29 June 2010
WINDHOEK – Developers of Rössing South uranium mine have refuted speculations of uncertainty due to Namibia’s signing of a multi-billion-dollar uranium investment deal with Russia.
The announcement comes at a time when Extract is preparing to submit a formal application for the mining licence by the end of this year.
Addressing shareholders at an annual general meeting last week, Extract’s chairman, Stephen Galloway, said dialogue between Extract and the Namibian Government on the development of the mine continues without apprehension from either side.
“I should add that in spite of recent media speculation, I can confirm that dialogue between the Namibian Government, Namibian stakeholders and Extract Resources, remains open and positive,” said Galloway.
Namibia signed an N$8-billion deal with Russia’s State Atomic Energy Corporation (Rosatom) during President Hifikepunye Pohamba’s visit to Moscow early this month.
It was also during this visit that a memorandum of agreement was signed involving intergovernmental agreements on peaceful nuclear energy and the possibility of Rosatom developing Rössing South uranium mine.
The agreements surprised many, especially since Extract is the majority shareholder of Rössing South uranium, with the Namibian Government having only expressed interest of becoming a minority shareholder.
Galloway said shareholders are committed to have Extract as the sole developer of the Rössing South uranium project, but this does not rule out the possibility of bringing in new partners.
“We continue to […] assess potential partnership opportunities that could deliver additional value to the development process. As part of this process, Extract remains in confidential discussions with potential partners. These discussions are ongoing,” said Galloway.
Current estimates are that the mine would produce about 6 800 tonnes (about 15 million pounds) of uranium oxide per year, which Galloway said, puts Extract in a unique and privileged position, as the mine would be one of the largest stand-alone mines in the world.
Work is already on schedule to complete an environmental impact assessment and management plan, in parallel with preparations for the mining licence application.
“Together with the definitive feasibility study, the outcomes from this work will be used to support a mining licence application over Rössing South before the end of 2010. This is an extremely positive position for the company and underpins the hard work by the management team to achieve our objectives,” said Galloway.
The company has already put in place an executive team, led by Norman Green, the person who brought Skorpion Zinc Mine on stream.
Bellona: Russia’s Atomflot reports ready for long-overdue decommissioning of old icebreakers, nuclear service ships
After a long period of inaction due to tight financing, the Russian nuclear fleet operator Atomflot gears up for decommissioning several of its old nuclear vessels – starting with the 1977-built nuclear icebreaker Siberia. Spent nuclear fuel and radioactive waste have been removed from the ship, and works done to ensure the hull bottom is watertight. Next in line are the icebreaker Arktika and the nuclear maintenance vessels Lotta, Lepse, and Volodarsky. Alexey Pavlov, 29/06-2010 - Translated by Maria Kaminskaya
Each nuclear icebreaker has its own finite useful life period – an estimated time frame that the vessel can remain in service. It is impossible to keep extending the life span of an icebreaker’s various mechanisms without risking an increased incidence of equipment malfunctions and system failures. The first to be laid to rest on Atomflot’s roster of nuclear icebreakers was the icebreaker Lenin: The veteran icebreaker is now permanently moored in the far northern city of Murmansk, retrofitted to function as a museum.
Lenin’s successors will be sent for complete dismantling, beginning with the Siberia. The vessel, which was put into commission in 1977 and broke Arctic ice until it was taken out of service in 1992, has been awaiting decommissioning for 18 years. Until very recently, Russia had no sufficient means to allocate to the costly procedure.
Besides icebreakers operating under extended life spans, on the books at Atomflot are decrepit nuclear service vessels – one among them, the Lepse, remains on the list of top radiation safety priorities in Russia’s north; it is laid up in Murmansk harbour, filled to the brim with damaged spent nuclear fuel – outmoded infrastructure, old technology and an ageing workforce whose experience will not be easy to replace.
And while Russia has been making efforts to earmark finances to help solve its own nuclear and radiation problems, the necessary funds have been hard to come by.
Decommissioning money finally started to flow in after Atomflot, the nuclear fleet operator company that was previously a structure of the Murmansk Shipping Company, was taken over by the Russian state nuclear corporation Rosatom in 2008. As for now, the Siberia is rid of its load of radioactive waste and spent nuclear fuel. The shutdown reactors currently remain on board and will only be dismantled during the cut-up. Welding works have been done on the ship while in the dock to repair the hull and ensure its floatability while the Siberia stays laid up before it is moved for dismantlement.
“The Siberia is now in a completely safe state since all radioactive [materials] have been unloaded,” Atomflot’s deputy chief engineer Oleg Bogorodsky told journalists at a recent briefing. “The decommissioning decision has not been made yet, however. This is state property, and when the owner makes the decision, work will first start on developing the decommissioning project, and only after that will the icebreaker be taken to the cutting yard.”
Rosatom earlier announced that dismantling works on the Siberia would start in 2011. This, however, seems unlikely before 2015, and the cutting-up will probably be scheduled as part of the next federal target programme “Nuclear and Radiation Safety for the Period Starting 2015.” The programme, however, is still being hammered out, and it is unclear when it will be adopted.
But the current nuclear and radiation safety target programme is well in progress and envisions, until 2015, the development of decommissioning projects for old icebreakers and nuclear maintenance ships, as well as setting up the RUR 500m ($16m) infrastructure needed to complete them. The service ships are the floating spent nuclear fuel storage facilities Lotta and Lepse, as well as the Volodarsky, which still has radioactive waste on board. Works are currently under way to unload radioactive materials from the Lotta.
“We send two to three containers [with spent nuclear fuel] from the Lotta to an onshore storage site each month. We are planning to finish before the end of 2011, but in reality, things aren’t always going according to plan,” said Andrei Abramov, who heads specialised production operations at Atomflot. “Our bottleneck problem is the single port crane, which cannot handle all the work. Which is why we are actively engaged in obtaining a second one. As for financing [needed to work] with the fuel – there are no problems there. The enterprise is receiving subsidies, including for this type of works.”
There is thus no clear deadline for when the Lotta is expected be towed away for the cut-up. Atomflot was planning to complete the dismantlement of all three service ships by 2015, but, according to Abramov, there is as yet only enough money to put together the decommissioning projects for the vessels.
There is one hopeful exception: The Lepse, one of Russia’s longest unsolved radiation safety issues, may soon expect decommissioning works to finally start within the framework of an international decommissioning project. Earlier this year, Bellona wrote an open letter to the Rosatom’s head Sergei Kiriyenko asking that he clear the bureaucratic hurdles blocking the Lepse’s decommissioning and expedite the process.
The Lepse was in service between 1963 and 1981, supplying fresh nuclear fuel and unloading spent fuel from nuclear-powered icebreakers. The necessity to decommission the Lepse was well recognised as early as 1989, and the first remediation project for the Lepse was initiated by Bellona as far back as 1994, when international donors started pledging funds to help safeguard this floating hazard.
But sixteen years on, the project is still spinning its wheels. The Lepse has still not been unburdened from the high-level radioactive waste and damaged nuclear rods stored in its holds and is still laid up at an Atomflot wharf just two kilometres from the residential buildings of Murmansk.
According to Atomflot, the immediate plans will see radioactive waste unloaded from the vessel and the ship itself decontaminated to ensure personnel safety while removing the spent nuclear fuel on board and during the subsequent cutting-up. Repairs have already been done on the hull bottom, prolonging the Lepse’s floatability for another ten years. Atomflot may have decided to play it safe in case the Lepse’s life span were to be extended. But given the decrepit state of Russia’s decommissioned nuclear fleet, this could indeed be a wise precaution: In early June, another former nuclear maintenance vessel, the Severka, which was used to shuttle shipping containers with spent nuclear fuel before the 1990s – and by 2010 itself constituted radioactive waste – was reported to have sunk at the wharf of a shiprepairing yard in Alexandrovsk on the Kola Peninsula, in close vicinity to the large administrative centre of Murmansk.
Atomflot reports that an international consultant has already been chosen to ensure all works on the Lepse meet international standards and are done in conformity with internationally accepted technologies. Before 2010 is out, contracts are expected to be concluded with the shiprepairing yard Nerpa, located in Snezhnogorsk in Murmansk Region. Both of these stages – including towing the Lepse to the yard – were previously scheduled for completion by 2009.
Andrei Ponomarenko, nuclear projects coordinator in Bellona-Murmansk, says there are indications that things are finally starting to move in the right direction.
“There have already been confirmations that works will indeed start [on the Lepse],” Ponomarenko said. “Atomflot is planning to begin preparatory works soon.”
Itar-Tass: Policeman wounded in shootout in Dagestan
30.06.2010, 10.02
MAKHACHKALA, June 30 (Itar-Tass) - One traffic police officer has been gravely wounded in the Khasavyurt district of Dagestan as unknown perpetrators opened fire on him.
The press service of the Dagestani Interior Ministry told Itar-Tass on Wednesday that the “incident took place at about 20:00 (June 29) on the outskirts of the Mogilevskoye settlement.” According to the police, unknown gunmen riding in a car fired several rounds from automatic weapons on a police officer who was standing at the roadside. The policeman with grave wounds was rushed to Khasavyurt hospital. Medics are trying to save his life.
The Vulkan-3 and Perekhvat interception plans have been activated in the district, police are taking measures to identify and detain the criminals.
June 30, 2010 11:19
Interfax: Group accused of illegal sale of precious metals detained in Moscow (Part 2)
MOSCOW. June 30 (Interfax) - Officers of law enforcement services have detained members of a Moscow-based organized group suspected of illegally selling precious metals.
"Officers of the economic security department together with the Russian FSB (Federal Security Service) branch for Moscow and the Moscow region have dismantled the activities of an organized group the members of which are suspected of illegal operations with refined precious metals (gold and silver) using VAT evasion schemes," the economic security department said on its website on Wednesday.
The group's illegal operations are believed to have brought in around 20 million rubles in cash every month.
"The group included senior managers and employees of several Moscow banks, heads of jewelry factories and jewelry stores, as well as people who registered and used fly-by-night firms," it said.
The group's multi-tier criminal schemes involved gradually transferring customers' money to current accounts belonging to a number of commercial banks, semi-legal companies and fly-by-night firms.
The money that was supposed to be transferred to the federal budget in the form of VAT was accumulated in accounts opened by fly-by-night firms and was then appropriated, the department said.
A criminal case was opened based on charges of illegal business operations and illegal trade in precious metals, it said.
tm dp
RUSSIAN SPY ARRESTS IN US
AFP: Spy scandal 'unconvincing and unnecessary': Russian media
AFP, Jun 30, 2010, 12.05pm IST
MOSCOW: Russian media on Wednesday disparaged US claims of a Russian spy ring, saying the scandal was an unconvincing sham aimed at derailing the reset in relations between Moscow and Washington.
"The highest-profile Russia spy scandal in the United States looks like the most unconvincing and most unnecessary," said the leading broadsheet daily Kommersant.
Several newspapers wrote that the scandal was directed against US President Barack Obama and his policy of resetting ties with Moscow after years of frigid relations.
"So stupid!" gushed Tvoi Den, one of Russia's most popular tabloid newspapers. "US special services let their president down conducting the silliest operation to capture sham Russian spies."
Mass-circulation newspaper Moskovsky Komsomolets — known for its close ties to the Kremlin — said that "it would be more logical to assume that the main target in this story is Obama who has a lot of ill-wishers in his own country."
"There's more politics than intelligence in this scandal," it added.
The US authorities announced late Monday they had broken a spy ring of 11 "deep-cover" suspects, accused of infiltrating US policymaker on behalf of the Kremlin and seeking details of US nuclear weapons and foreign policy.
"FBI interfered in the reset," declared newspaper Nezavisimaya Gazeta. "The spy scandal brings into question the rapprochement between Moscow and Washington."
But Kommersant said the reaction from the Kremlin and the White House meant that both Russia and the United States wanted to limit the fallout so as not to hurt rapidly improving bilateral relations.
Quoting an unidentified high-ranking source in diplomatic circles, Kommersant said all the country's "eloquent speakers" had been ordered to refrain from making public comments so as not to fan the flames of the spy scandal.
Many of the commentators, who usually speak on behalf of the Kremlin, refused to comment on Tuesday.
A spokeswoman for Mikhail Margelov — the usually highly loquacious chairman of the foreign affairs committee of Russia's upper house of parliament — said he was unavailable.
"He is neither the intelligence nor the foreign ministry, he will not comment on anything," the spokeswoman said.
Xinhua: U.S.-Russia Spy Case Irritating but Not Devastating: Analysis
| 2010-06-30 05:30:48 Xinhua Web Editor: Yang Yang |
by Igor Serebryany
The arrests of 10 alleged Russian spies in the U.S. this week may be an attempt to undermine trust between the two countries that glimmered during a recent meeting of their presidents.
But still, the arrests are unlikely to have any devastating effect on their warming bilateral relations, most experts agree.
ELEVEN SUSPECTS ARRESTED
The U.S. Justice Department announced Monday that 11 people had been charged as "unlawful agents of the Russian Federation within the United States." Ten suspected spies were arrested Sunday in the United States and an 11th was detained Tuesday in Cyprus before being released on bail.
The FBI said that the suspects had been spying for Russia for a decade or more, posing as civilians while trying to infiltrate U.S. policy-making circles and learn about U.S. weapons, diplomatic strategy and politics.
According to a CBC Radio broadcast from Toronto on Tuesday, four of the 11 spies carried forged Canadian passports. Three of the suspects, now in custody, were accused of posing as Canadians to cover their tracks while on assignment in the United States.
According to a complaint filed in federal court, some of the suspects had been under surveillance since January and their correspondence with Russia's intelligence service, the SRV, in Moscow had been intercepted and decoded.
The FBI said various espionage techniques were used by the suspects, varying from old-fashioned "drops" in parks to hi-tech electronic encoding.
FBI files submitted to the court said some of the suspects were in contact with Russian "state officials," including diplomats.
The Russian foreign ministers said later Tuesday that Russian citizens are among the suspects and they should have access to the lawyers.
RUSSIA AWAITS EXPLANATIONS
In response to the spy scandal, the Russian foreign ministry said Tuesday that the alleged reports of Russian spies in the United States were groundless.
"We believe such actions are ungrounded and have unseemly goals. We do not understand the reasons why the U.S. Department of Justice has made a public statement in the spirit of the Cold War," said ministry spokesman Andrei Nesterenko.
"In any case, it is regrettable that all these things are happening on the background of the 'reset' in Russian-U.S. relations announced by the U.S. administration," Nesterenko said.
Earlier Tuesday, Foreign Minister Sergei Lavrov said in Jerusalem that his country awaits explanations from the U.S. on the detention of the alleged spies. Lavrov said the time of the reports "was selected with a special grace."
An official from the ministry said on the same day that information concerning the spy scandal was contradictory.
"Messages are being studied, which are controversial and require further clarification," the official said.
Russian President Dmitry Medvedev has just concluded a tour to the United States, during which he and U.S. President Barack Obama vowed to reset and broaden their countries' bilateral ties. They even snuck out for lunch and ate cheeseburgers at a nearby restaurant.
NO REASON TO WHIP UP
Some Russian lawmakers described the arrests as an attempt to undermine growing trust in relations between Russia and the United States.
Nikolai Kolesnikov, the deputy head of the Russian Parliamentary Security Committee, said the scandal was orchestrated by people whose attitude toward Russia was still based on Cold War-era stereotypes, the RIA Novosti news agency reported.
Many people involved in American politics view the recent warm spell in relations between the two countries as "inappropriate," he said.
Victor Kremenyuk, deputy director of the Russian Institute for U.S. and Canada studies, was convinced the entire affair had been a "provocation."
"In the United States, there are forces unhappy with the rapprochement of the two countries and warming up of their relations," Kremenyuk told Xinhua. "Perhaps, somebody wants to shift the opinion of the U.S. lawmakers in light of current START (Strategic Arms Reduction Treaty) ratification process and to disrupt the process."
Other Russian observers urged that the consequences of the incident not be overblown.
Alexander Torshin, the first deputy speaker of the Russian Federal Council, or the upper house of the Russian parliament, urged caution.
"This is not a return to the Cold War, and this incident will not become a large-scale spy scandal," Torshin said.
The recent decision by the United States to put Chechen warlord Doku Umarov on its international wanted terrorist list was a serious signal indicating that relations between Moscow and Washington have reached an "unprecedentedly high level," Torshin said.
"I don't think this will change the alignment of forces very seriously. This is part of the game," Sergei Karaganov, chairman of the Foreign and Defense Policy Council, told the Interfax news agency.
Reuters: FACTBOX - Major issues, disputes in U.S.-Russia ties
WASHINGTON
Wed Jun 30, 2010 2:46am IST
2:46am IST
WASHINGTON (Reuters) - Ties between Russia and the United States have enjoyed a renaissance since President Barack Obama took office seeking to "reset" a relationship that hit a post-Cold War low with Moscow's 2008 war against Georgia.
Following are the main areas of progress, notably in arms control, and the major disputes, including Russian recognition of two breakaway Georgian regions, its perceived backsliding on human rights and democracy, and its halting economic reform.
Analysts do not expect U.S. arrests of 10 alleged Russian spies to derail relations, which appeared particularly chummy when Russian President Dmitry Medvedev visited Washington last week and Obama bought him a cheeseburger at Ray's Hell Burger.
ARMS CONTROL
Obama and Medvedev signed a landmark disarmament treaty on April 8 that would cut the strategic nuclear arsenals deployed by the former Cold War foes by 30 percent but still leave each with enough to destroy the other.
The so-called New Start treaty is a successor to the 1991 Strategic Arms Reduction Treaty and would limit operationally deployed nuclear warheads to 1,550. It requires ratification by the U.S. Senate and the Russian Duma.
Cutting their arsenals further is likely to be much more difficult, U.S. officials and analysts say. The new treaty does not limit shorter-range tactical nuclear weapons, where Russia enjoys massive superiority that it is reluctant to give up.
IRAN
Moscow sided with Washington on June 9 in imposing a fresh round of U.N. Security Council sanctions against Iran, which the West accuses of seeking nuclear weapons under the cover of a civilian nuclear program. Iran denies this.
Russia, which has strong economic ties with Tehran and has at times resisted sanctions, backed the U.N. move to blacklist dozens of Iranian military, industrial and shipping firms.
The sanctions also provide for inspections of suspect cargoes to and from Iran and tighten an existing arms embargo.
U.S. officials were especially pleased by Russia's decision to freeze a deal to sell S-300 surface-to-air missiles to Iran even though this was not strictly barred by the resolution.
AFGHANISTAN
Russia last year agreed to allow the United States to fly weapons, hardware and personnel across its territory to Afghanistan.
Before this, the Pentagon could only transport non-lethal supplies across Russia, but other NATO member states such as Germany, France and Spain have had more liberal agreements.
GEORGIA
Russia's war against Georgia in 2008 caused the worst rift with the West since the fall of the Soviet Union in 1991.
The Georgian regions of Abkhazia and South Ossetia broke away from Georgian rule in wars in the early 1990s after the collapse of the Soviet Union.
Georgia launched an assault to try to retake control of South Ossetia in August 2008, triggering a devastating Russian counterstrike that resulted in Russian forces controlling the borders of both regions.
While U.S.-Russian tensions over the issue have eased somewhat, the United States rejects Russian recognition of the two regions, which remain heavily dependent on Moscow for security and economic assistance.
Washington insists the West will not accept a return to a Soviet-style "sphere of influence" on Russia's borders but it has yet to find a way to get Moscow to budge.
NATO EXPANSION
Russia fiercely opposed proposals -- spearheaded by the Bush administration -- to bring former Soviet republics Georgia and Ukraine into the NATO military alliance.
Both states are in a region where the Kremlin says it has "privileged interests" and wants to prevent further encroachment by Western powers.
NATO has said Georgia and Ukraine will join eventually but has declined to put them on an immediate path to membership.
Mindful that some other NATO allies are reluctant to see the issue antagonize Moscow, Obama has taken a more cautious approach than former President George W. Bush to any future eastward expansion by NATO.
Strains over the issue have eased somewhat with the election of Ukrainian President Viktor Yanukovich, who has abandoned his predecessor's goal of joining the alliance but has retained European Union membership as a long term goal.
HUMAN RIGHTS, DEMOCRACY, ECONOMIC REFORM
The Kremlin was angered by what Russian officials viewed as the Bush administration's preachy public criticism of Russia's respect for human rights and democratic norms.
The Obama administration made a calculated decision not to lecture the Kremlin in public, saying that this was ineffective and that they raise these concerns forcefully in private.
After more than a decade of relative economic freedom, Russia's economy is still stuck in its dependence on energy, sending natural gas to Europe and petroleum to the world.
Russian officials say they want more U.S. investment and to finally achieve their 17-year quest to join the World Trade Organization.
While Obama last week repeated his commitment to Russia's WTO accession -- it is the largest economy outside the world trade body -- U.S. officials have said Moscow must take the necessary economic and legal reforms.
Among these, U.S. officials say Russia must offer better protections for intellectual property rights as well as a basic rule of law so that foreign companies can be confident of getting a fair shake in Russian courts.
(Additional reporting by Matt Spetalnick in Washington andMichael Stott in Moscow; editing by Chris Wilson)
Reuters: Russia angry as U.S. seeks to limit spy fallout
Wed Jun 30, 2010 2:50am IST
By Alexei Anishchuk and Andrew Quinn
World
MOSCOW/WASHINGTON (Reuters) - Moscow on Tuesday angrily rejected allegations by Washington that it had cracked an undercover Russian spy ring but U.S. officials said the Cold War-style cloak and dagger saga would not undermine a thaw in relations.
Prime Minister Vladimir Putin said U.S. police who arrested 10 suspected spies in four cities in the eastern the United States on Sunday had gone "out of control".
"I hope that all the positive gains that have been achieved in our relationship will not be damaged by the recent event," Putin told visiting ex-U.S. President Bill Clinton in Moscow.
An 11th suspect was arrested in Cyprus on Tuesday and freed on bail, police on the Mediterranean island said. The Russian Foreign Ministry said those arrested in the United States were Russians and the charges against them were baseless.
In Washington, administration officials said the case would not set back President Barack Obama's drive to "reset" ties with Russia, one of the signature diplomatic initiatives of his administration.
"I think we have made a new start to working together on things like in the United Nations dealing with North Korea and Iran," White House spokesman Robert Gibbs said. "I do not think that this will affect those relations."
The suspects, some of whom lived quiet lives in American suburbia for years, were accused of gathering information ranging from data on high-penetration nuclear warhead research programs to background on CIA job applicants.
OBAMA-MEDVEDEV MEETING
Gibbs said President Barack Obama knew about the spy investigation before he met with Russian President Dmitry Medvedev in Washington late last week, but did not mention it during their talks.
"The choice of timing was particularly graceful," Russian Foreign Minister Sergei Lavrov told journalists sarcastically during a trip to Jerusalem. Other Russian officials also suggested the timing was no coincidence.
"We do not understand what prompted the U.S. Justice Department to make a public statement in the spirit of Cold War espionage," the Foreign Ministry said in a statement.
It said lawyers and diplomats should be given access to the suspects. The U.S. Justice Department said all proper consular procedures were being followed.
With buried banknotes, coded communications and other details, the U.S. accusations echoed spy scandals of the 20th century and the more recent chill in relations with a Kremlin which, under the 2000-2008 presidency of ex-KGB spy Putin, often accused the West of trying to weaken Russia.
Britain and Ireland both said they were checking reports suspects had traveled on false passports from their countries.
Moscow has repeatedly accused Western powers of maintaining spying operations against Russia despite the end of the Cold War. Western powers also complain of Russian activity, especially in the commercial and scientific areas.
"We're moving towards a more trusting relationship. We're beyond the Cold War," Gordon said. "But ...I don't think anyone was hugely shocked to know that some vestiges of old attempts to use intelligence are still there."
U.S. Russia analyst Samuel Charap of the Center for American Progress said the fallout could be contained due to the fact that none of those accused in the case thus far were diplomats and the charges did not include espionage.
LINGERING DISTRUST
But he added that the case exposed lingering distrust on both sides, which could reverberate in the U.S. Senate where the administration hopes to persuade some sceptical Republicans to back the ratify a new U.S-Russia disarmament treaty.
Russian analysts said the timing suggested it was an attempt to undermine improving relations, although Justice Department officials said the arrests were ordered because it was feared one suspect was about to leave the country.
"It's a slap in the face to Barack Obama," said Anatoly Tsyganok, a political analyst at Moscow's Institute of Political and Military Analysis. He predicted Russia would follow Cold War etiquette and uncover an equal number of alleged U.S. spies.
A senior State Department official noted one of the expressions of Russian outrage was from Putin, who was a spymaster in the late 1990s when, according to the allegations, some of the suspected agents were already in place.
"It would have been nice if he'd have thought about that first," the official said.
Tatyana Stanovaya, political analyst at Moscow's Center for Political Technologies, said the accusations could widen a rift in Russia's elite between advocates and opponents of better U.S. ties.
Stanovaya said it could dent the authority of Medvedev, who is struggling to emerge from Putin's shadow and has made engagement with Washington a hallmark of his presidency.
The U.S. Justice Department accused the 11 people of operating as "illegals", meaning agents infiltrated under false identities, rather than officers who use diplomatic or other legitimate cover.
They were accused of collecting information ranging from research programs on small-yield, high-penetration nuclear warheads to the global gold market, and seeking background on people who applied for jobs at the Central Intelligence Agency (CIA), according to criminal complaints filed in a U.S. court.
(Additional reporting by Dmitry Zhdannikov, Amie Ferris-Rotman, Arshad Mohammed and Jeremy Pelofsky; Writing by Conor Humphries and Steve Gutterman; Editing by David Storey)
Globe and Mail: 'Canadian’ couple in alleged spy ring put down roots in U.S.
Canada a favourite place for Russian 'illegals’ as a staging ground before moving south, former KGB general says
Colin Freeze and Adrian Morrow
Globe and Mail Update Published on Wednesday, Jun. 30, 2010 3:00AM EDT Last updated on Wednesday, Jun. 30, 2010 3:15AM EDT
He was a well-connected businessman who graduated from Toronto’s York University before moving on to Harvard. She was a real estate agent who told people she studied at McGill in Montreal. Since 1999, the couple has lived in the United States together.
If new U.S. allegations are true, the couple’s move was less about any brain drain of Canadian citizens than it was a meticulous Russian plot: “Ann Foley” and “Don Heathfield” were instructed to gather intelligence by insinuating themselves into the U.S. intelligentsia, by stealing nuclear secrets and by making friends in “policy-making circles.”
Following their arrests this week in their neighbourhood near Harvard, those closest to them expressed shock – and circumspection. “Everyone said she was Canadian,” said Glenn Kelman, president of Redfin Realty, in Cambridge, Mass. Then again, “there were some that said her accent didn't quite sound like a French-Canadian accent.”
Regardless, “she was a darn good field agent,” he said.
The husband and wife were among 11 alleged “illegal” undercover spies arrested in a stunning bust that amounts to the biggest exposure of an alleged Russian spy ring operating inside the United States since the end of the Cold War.
Washington insists the arrests won’t upset improved Russian-American relations. Spokesman Robert Gibbs said President Barack Obama was briefed about the ring long before his meeting last week with his Russian counterpart.
The Russian Foreign Ministry has denounced the charges as baseless. The accused face charges of money laundering and failing to properly register as agents of a foreign government. No espionage charges have been laid as the investigation continues.
Many observers suggest Moscow’s overseas meddling has only gotten worse since the end of the Cold War, especially since former KGB-agent-turned-Prime Minister Vladimir Putin ascended to power. Even in the age of Google and cyber-espionage, Moscow still sticks with some very tried-and-true tradecraft first employed during the Soviet days.
This keeps counterespionage desks in Western democracies busy. “We continue to work with our allies on the issue,” said a spokesman for Lawrence Cannon, Canada’s Foreign Affairs Minister, who declined to go into details about Ottawa’s reaction to the alleged spy ring. Last week, Canada’s top spymaster did go public with concerns that clandestine foreign agents are present in Canada and are undermining democracy.
“Canada, from time immemorial, has been a favourite place for Russian ‘illegals’ as a staging ground before moving down south,” a former KGB general, Oleg Kalugin, told CTV Tuesday. “... We felt quite safe in Canada.”
So-called “illegals” are covert agents who live undercover for years abroad while painstakingly building a “legend” about who they are supposed to be.
The alleged Russian spy network appears to have been doing this for more than a decade-and-a-half.
Yet the U.S. Federal Bureau of Investigation was along for much of the ride. The first clue about the spy ring emerged in a Cambridge safety deposit box, where the “Canadian” couple kept pictures of Ms. Foley in her prime. The FBI snooped in on the box to discover one negative was stamped with the name of a Soviet film company.
Astonishingly, the FBI says they learned that in 2001 – meaning the discovery was just the beginning of a very patient game of cat and mouse.
The York University registrar’s office confirmed to The Globe and Mail Tuesday that Mr. Heathfield graduated with an economics degree in June, 1995. His Canadian activities before that time are unknown.
He got his degree just a few months before a distinct Russian husband-and-wife team of illegals in Toronto was deported for stealing the identities of dead infants – the very same method he may have employed. After leaving Canada, Mr. Heathfield went on to launch several French and American business ventures, and to study at Harvard’s Kennedy School of Governance.
An impressive intellectual, he has even patented a computer program for “mapping future events.” But however forward-looking he may be, his back story has a hole: A 2005 death notice published in a Toronto newspaper blows apart his legend.
The FBI points out that Don Heathfield “predeceased” his father, Howard, a Royal Canadian Legion member who died five years ago. Yet for years after, a Massachusetts man operating under that name was kept under surveillance, and allegedly spotted sending messages to Moscow – via encrypted e-mails and short-wave radio.
McGill University can provide no public or alumni records indicating his wife, Ms. Foley, actually attended. Her public LinkedIn profile says that she did.
The FBI says Ms. Foley was once instructed to get to Moscow on a fake British passport. “Destroy the memo after reading. Be well,” reads the intercepted communiqué, according to the FBI.
Craig Sandler, a classmate of Mr. Heathfield's at Harvard, recalled the accused spy as an engaging, intelligent man.
“There's no doubt I thought of him as an international sophisticate,” said Mr. Sandler, who runs a wire service that covers Massachusetts state politics. “My only regret about my relationship with Don is that we didn't see each other more often or go for dinner.”
Mr. Sandler kept in touch with Mr. Heathfield over the years and would occasionally have a drink with him and other fellow classmates, where they would discuss the technology Mr. Heathfield was developing.
He said his friend spoke with a French accent, but that he didn't know anything about his past.
Among Mr. Heathfield's other Kennedy School classmates are two members of the state legislature.
With reports from Paul Koring, Campbell Clark and Greg McArthur
Page last updated at 05:56 GMT, Wednesday, 30 June 2010 06:56 UK
BBC: Spy row highlights schizophrenic US-Russia ties
By Jonathan Marcus
BBC Diplomatic Correspondent
Less than a week ago, Russian President Dmitry Medvedev was visiting factories in California's Silicon Valley, eager to enlist US firms in Russia's own technological revolution.
All the talk was of the relative success of the "re-setting of ties" between Washington and Moscow undertaken by the Obama administration.
But now the headlines are harking back to a very different, older, more adversarial relationship following the arrest of a network of alleged Russian agents by the FBI.
Charles Kupchan, professor of international affairs at Georgetown University's School of Foreign Service, believes this episode "has come at a very awkward moment - just as Moscow and Washington are in the midst of pursuing rapprochement and deepening strategic cooperation".
"Nonetheless, espionage - for better or worse - remains a fixture of international politics," Prof Kupchan said.
"The revelation of the alleged Russian spy ring thus represents primarily a public relations challenge to the policy of re-setting relations, not a discovery that promises to scuttle improving ties between the US and Russia."
'Unfortunate timing'
Jeffrey Mankoff, a fellow for Russian studies at the Council on Foreign Relations, agrees the wider impact of this affair will in all likelihood be limited.
"There are friendly countries, there are no friendly intelligence agencies," Mr Mankoff explained.
"The fact of widespread espionage and counter-espionage between the US and Russia is a legacy of the Cold War and has little to do with the state of bilateral relations at any given moment," he said.
Mr Mankoff accepts that "the timing of this case is unfortunate".
"It threatens to take some of the glow off President Medvedev's successful US visit last week," he said.
He argued there would probably be a brief period of muted recriminations, but that then this episode would fade.
His colleague, Stephen Sestanovich, one of Washington's leading commentators on Russian affairs, also believes the fall-out from this affair will be limited.
"In both countries espionage and counter espionage efforts are only very loosely tied to diplomacy. Both governments will want to keep the affair from taking on too much significance," said Mr Sestanovich.
Cold War infrastructure
For a Russian take on the affair, I turned to Dmitri Trenin, director of the Carnegie Moscow Centre.
His hope was that its impact would be short-lived.
But in Mr Trenin's view "both Russia and the United States still keep much more of the Cold War infrastructure than is needed by either".
He had an intriguing point of view on the specific timing of this announcement. While most US commentators have been speculating about Russian motives, Dmitri Trenin believes the timing of the announcement of these arrests is telling.
Mr Trenin sees two groups of interest in this matter. The first he says are "those in the US who are unhappy about the re-set in relations, who argue that Russia is getting much more out of it and want it to slow down".
Mr Trenin says the second group is the "FBI, which wants to burnish its reputation after the Times Square bomb incident and the Chicago Christmas airline bomb-plot".
Of course there are clearly different constituencies at work in Moscow, too.
As Charles Kupchan said: "When it comes to re-setting relations with the United States and with Nato, Russia's security, defence and foreign policy bureaucracy tend to drag their feet. President Medvedev seems to be in the lead on this front, pulling a reluctant bureaucracy behind him."
Legacy of the past
Earlier this month, US Defence Secretary Robert Gates described Russia's foreign policy as "schizophrenic".
He was referring to Moscow's ambivalent approach towards Iran's nuclear activities.
But when asked whether this might be an appropriate label to describe Russia's whole approach to the Obama administration as well?
Dmitri Trenin said: "I think the US-Russian relationship as a whole is somewhat schizophrenic."
But what really worried him was the way in which the legacy of the past intruded into the present. Should we really be so surprised by these espionage allegations?
"I trust there are US spies in Russia and will be for a long time, never mind the re-set," Mr Trenin said.
He added: "But I am even more troubled that 20 years after the end of the Cold War, Moscow and Washington are still targeted by very real nuclear missiles of the 'other side'. The nukes may have had a real deterrence mission in the Cold War, but now it's like the light of a star that is long dead - dead but dangerous."
Charles Kupchan too believes that Russian foreign policy has a "schizophrenic" quality to it.
He said: "On the one hand, Moscow seems sincerely intent on pursuing rapprochement with the West and finding its place within the Euro-Atlantic order."
But Prof Kupchan said that, on the other hand, "its policies toward Georgia and missile defence and its use of its energy supplies to coerce its neighbours indicate otherwise".
Everyone I spoke to in both Washington and Moscow wondered if the US might in due course throw out the Russian handlers of these alleged agents if, that is, these diplomats are still on US soil.
That would be playing pretty much to form - you are found out and you walk.
If this happens maybe Moscow might reciprocate with expulsions of its own. But after that things would in all probability calm down.
All of the commentators and analysts were pretty much of one mind: Both the re-set and the diplomatic schizophrenia in relations between Russia and the US look set to continue.
Blogs.telegraph: Russian spy ring: Medvedev's allies blame US politicians for 'Right-wing conspiracy'
updated: June 30th, 2010
Andrew Osborn is the Daily Telegraph's Moscow correspondent. He has lived in Russia since 2004 and covered the Beslan school siege, the 2008 Russia-Georgia war, and has reported widely from across the former Soviet Union.
Footage of US President Barack Obama and Russian President Dmitry Medvedev munching burgers in an American diner last week went down a storm in Russia. It was shown ad nauseum until every Russian must have known off by heart exactly what condiments the two world leaders had to choose from and how many ice cubes they had in their respective drinks.
News that eleven people in the United States have been accused of being Russian spies is obviously going to play less well. But more pertinently, it leaves the Kremlin with something of a public relations problem, with its own population. After years of spoon-feeding a largely receptive and embittered population oodles of anti-American propaganda designed to distract it from its own problems, the Kremlin recently had a change of heart. Not because it decided that it suddenly liked the United States but because it found itself on the receiving end of a pragmatic Barack Obama charm offensive and because it decided that it urgently needed foreign investment and technology.
So it was that the most rabid anti-American Kremlin stooges on state TV were muzzled and state TV portrayed President Medvedev’s trip to the United States last week as a sign that Russia is once again, if not exactly an equal partner, a great power whose opinion matters. Backed by generally high oil prices, the third largest international reserves in the world, and an economy that appears to be coming out of the global recession faster than Western rivals, the Kremlin is once again feeling confident.
Yet the spy row has left it in a bind. President Medvedev has invested too much political capital and too much propaganda in better relations with the United States to suddenly perform a U-turn now. The only way is forward. Russian politicians are therefore already punting a convenient conspiracy theory. The spies are not spies and the “plot” was announced just after President Medvedev’s trip to the US by American Right-wingers intent on embarrassing President Obama and killing of better relations between the two countries.
It is a theory that allows the Russians to publicly save face: it is not our new friends that have stabbed us in the back but the enemies of our new friends. Yet the real victim of the dispute may not be Mr Obama but Mr Medvedev or, more accurately, the policy vector he represents. He is the one who has publicly gambled on embracing the West, while Vladimir Putin, the prime minister and former president, has kept notably quiet on the subject and is known for his tough anti-Western rhetoric.
In 2012, Russians are due to choose a new president. Some say the result doesn’t matter and that whoever wins the same small elite and people with links to Putin will remain in charge. That may be right but what is perhaps on the line is the country’s future direction. If ordinary Russians sense that Mr Medvedev’s flirtation with the West has been a flop, Mr Putin could be back in his old job as president and may not be so keen on hanging out in a diner with an American president.
June 29, 2010
Russia Profile: Tinker, Tailor, Housewife, Spy
By Tom Balmforth
Russia Profile
Were the Spies Who Operated For Years in American Suburbia Betrayed By a Mole in Their Own Service
Ten alleged Russian agents were arrested in the United States and charged with “deep cover” intelligence gathering on Sunday, only two days after President Dmitry Medvedev completed his tour of the country. Back in Moscow some top Russian officials already suspect the spy bust was timed deliberately to undermine U.S.-Russian relations by opponents of the “reset.” Meanwhile in the United States the Republican Party will look to exploit the finding in campaigning against the Obama administration. So how big a setback is this scandal for the recent phase of warmer U.S.-Russian relations?
Ten alleged Russian spies were arrested and charged on Sunday with “long-term, deep cover” operations on United States territory. An eleventh person who had been on the run using a Canadian passport was detained this afternoon in Cyprus. He is thought to be the final member of the spy ring.
All eleven are charged with “conspiring to act as unlawful agents of the Russian Federation within the United States,” punishable by up to five years in prison, and nine of them have been charged with “conspiracy to commit money laundering,” which carries a 20-year sentence.
The spies from the SVR, Russia’s foreign intelligence service, were gathering intelligence on nuclear weapons, arms control positions, Iran, political changes in parties, and leadership changes within the CIA, according to documents drawn up over the course of a “multiyear” FBI investigation.
The SVR agents were working under false identities, often as couples, and had been living in the United States since the 1990s. To minimize contact between members of the spy ring, handlers communicated with operatives via closed wireless networks. The U.S. Department of Justice Web site details how one Russian agent, known as Anna Chapman, was seen “on multiple occasions” “in the vicinity” of “Russian government official number one” - presumably the handler. Chapman was eventually caught on June 26 in an FBI sting operation, where an American agent known as “UC-1,” posing as a Russian consulate employee, arranged a meeting with Chapman to help her with technical difficulties that Chapman was experiencing with her laptop.
One message directed to a field agent, but apparently intercepted by the FBI after it left “Moscow Center” (the apparent alias for the SVR headquarters), reads: “You were sent to the United States for a long-term service trip. Your education, your bank accounts, car, house, etc. – all these serve one goal: to fulfill your main mission, i.e. to search and develop ties in policy making circles in the United States and send intels (intelligence) to C (center).”
A retired SVR officer, who requested anonymity, told Russia Profile that “deep cover” field agents usually never know each other, meaning that the FBI must have a mole working from Moscow to have made a bust of this scale.
“If one deep undercover agent gets arrested, it's a failure, if 11 deep undercover agents get arrested, it's a betrayal here, at the Center,” he said.
Less than a week ago Medvedev and president Obama were eating hamburgers in a Washington diner during Medvedev’s tour of the United States. Russia’s five foot four president cut an impressive PR-savvy figure during the America tour, as he won pledges from Obama on Russia’s speedy accession to the WTO, received the first ever new iPhone 4, opened a Twitter account, as well as delivered a surprisingly disarming “hasta la vista” impression of the Terminator-turned-Governor Arnold Schwarzenegger on his trip to California.
Two days later Medvedev’s trip has certainly been overshadowed, but whether the scandal will actually undermine the recent phase of warmer of Russian-U.S. relations is still unclear, said Anatol Lieven, a professor of international relations at King’s College London. “It all depends on the impact that the governments want it to have. These things happen fairly often and the question is the response,” he said. If Washington responds with a series of diplomatic expulsions, and Moscow responds tit-for-tat, then it could escalate, he said. “If the Obama administration does not expel Russian agents working under diplomatic cover – that will be a real sign that the Americans don’t want to build this up into a big thing.”
Meanwhile in Russia the timing of the spy scandal is being heavily scrutinized. Russian Foreign Minister Sergei Lavrov said he had not been kept in the loop and did so with a dose of trademark sarcasm. “They have not explained to us what is going on. I hope they will,” Lavrov told journalists during his Middle East tour. “The only thing I can say is that the timing was chosen with particular care.”
The Deputy Head of the State Duma Security Committee Nikolai Kolesnikov was even more explicit. Kolesnikov said it was “no coincidence” that the bust occurred only two days after Medvedev had completed his trip to America, RIA Novosti reported. “Unfortunately, in America there are people who still have Cold War mentalities and double standards. That’s why the warming, which has taken place since the coming to power of the young presidents, whose actions have led to the constructive development of all forms of relations…to put it mildly, is inadequate,” he said.
But Alexander Rahr, program director of Russia and Eurasia at the German Council on Foreign Relations, played down the idea that it was in some way purposefully carried out to derail relations. “The reset is continuing. Relations between Russia and the United States were never so good under President George Bush. Not everyone likes this in the United States, and not everybody likes it in Russia. But it would be far-fetched to say that this spy scandal has been artificially organized by forces on one or the other sides who want to spoil this,” said Rahr, adding that it would nonetheless be a “test of the ‘reset’.”
Lieven was more guarded and said there was “perhaps” something in Lavrov’s insinuations, adding of course that it was still “pure speculation.” But Obama’s opponents will try to capitalize, said Lieven. “In America undoubtedly there will be an attempt by the republicans and anyone who is opposed either to the Obama administration, or to the attempt to improve U.S.-Russian relations, to blow this up into a scandal,” he said. Obama has been eager to distance himself from the bust and an administration source told the New York Times that he is “unhappy” with the timing.
Rahr said what was most peculiar about the story was that it involved political espionage, rather than industrial or military. “It’s a strange story – for me it’s hard to believe that Russia is seriously engaged in political spying,” he said. “I can imagine that this is not state-sponsored espionage but maybe even some attempt to blackmail or form a pro-Russian business society or business lobby in the United States,” said Rahr, adding that there could be more damage to relations done if the trail does end up leading back to Russian officials after the court hearings, which began today.
Several countries have recently complained about increasing Russian spy activity on their territory, which has targeted above all the industry and technology sectors. Last week the Czech Republic’s intelligence service released its 2009 roundup that noted concerted attempts by Russian companies to penetrate the Czech energy market with the help of Russian intelligence gathering missions. “In terms of coverage, intensity, aggressive nature and quantity of operations, the Russian intelligence services have no rivals in the territory of the Czech Republic,” the report reads. Yesterday a German Interior Ministry report noted – and not for the first time – that Russian industrial espionage in Germany is more prevalent than that of any other country with only the exception of China.
The retired FSB officer told Russia Profile that all countries engage in espionage such as the type being seen in the scandal, even on the territory of their allies. Meanwhile the manifesto of the SVR, posted on its Web site, claims to have toned down its activities. “If during the period of confrontation between the West and East, spying took place in practically all countries where there were American and NATO country special services, then nowadays the SVR operates only in those regions where Russia has genuine and not imaginary interests.”
Whether genuine or imaginary, detractors of the reset will try to stoke tensions. Nonetheless, the administrations have the final say. “The scandal is in the eye of the beholder – in the eye of the government. We have to see what the U.S. administration and the Russian administration do next,” said Lieven.
Moscow Times: Spy Affair Called Attempt to Discredit Obama
30 June 2010
By Nabi Abdullaev
The U.S. arrest of 10 suspected Russian spies right after President Barack Obama welcomed President Dmitry Medvedev to the White House deals a stinging blow to resurgent ties and might discredit Obama, who sees the "reset" of relations as a main achievement of his administration, Russian officials said Tuesday.
Russian authorities refused to say whether the suspects were indeed "illegals," as claimed by the U.S. Justice Department in court papers filed Monday, and said they were waiting for an explanation from the United States.
"The issue was not explained to us. I hope they will explain," Foreign Minister Sergei Lavrov told journalists in Jerusalem.
The Justice Department said the suspects, detained in raids in New York, Boston and northern Virginia on Sunday, had been collecting information for the Foreign Intelligence Service for at least seven years, and possibly as far back as the early 1990s.
"The choice of timing was particularly refined," Lavrov said sarcastically, referring to the fact that the arrests occurred after Obama met with Medvedev on Thursday for a visit widely seen as the latest step in the "reset" of relations between the former Cold War rivals.
A source in Obama's administration said the president was not happy about the timing of the arrests, but investigators feared that some of their suspects might flee, The New York Times reported.
The arrests might have been spurred by an FBI sting operation on Saturday in which one of the, Anna Chapman, was given a fake passport by FBI operatives posing as Russian agents to pass on to someone else. Chapman instead turned the passport over to New York police, her lawyer said in court Monday. The police visit, if leaked to the media, could have potentially blown the entire FBI operation.
The Foreign Ministry confirmed that several suspects were Russian citizens, and NTV television identified two of them as Chapman and Mikhail Semenko.
The suspects, who are not accused of espionage, have been charged with conspiracy to act as an agent of a foreign government without notifying U.S. authorities, a crime punishable by up to five years in prison. Nine of the suspects also have been charged with money laundering, which carries a conviction of up to 20 years.
An 11th suspect was detained in Cyprus on Tuesday but released on bail.
"In total, 11 defendants, including the 10 arrested, are charged in two separate criminal complaints with conspiring to act as unlawful agents of the Russian Federation within the United States," the Justice Department said in a statement.
This case is the result of a multiyear investigation conducted by the FBI; the U.S. Attorney’s Office for the Southern District of New York; and the Counterespionage Section and the Office of Intelligence within the Justice Department’s National Security Division, the statement said.
The Foreign Ministry said in a statement that it did not understand what motivated the U.S. Justice Department to publicly speak in the spirit of "spy passions dating back to the times of the Cold War." It said the "unfounded" arrests pursued "unseemly goals" that contradicted the "reset" in U.S.-Russian ties proclaimed by the Obama administration.
Putin took a low-key approach to the arrests.
"Back at your home, the police went out of control [and] are throwing people in jail," Putin told former U.S. President Bill Clinton during a meeting in Moscow. "But that's the kind of job they have. I hope that all the positive gains that have been achieved in our relationship will not be damaged by the recent event."
In Washington, the State Department said Tuesday that the spy case would not derail "reset" efforts. "We feel that we have made significant progress in the 18 months that we have been pursuing this different relationship with Russia. We think we have something to show for it," Assistant Secretary of State Philip Gordon told reporters.
But Gennady Gudkov, a former KGB counterintelligence official who serves as deputy head of the State Duma's Security Committee, said the spy allegations threaten to upset the "reset" by tarnishing Russia's image in the eyes of the American people and could have been masterminded by opponents hoping to discredit Obama.
"Now millions of Americans will think that Russia was only pretending to be a partner of the United States but is in fact still going after U.S. secrets like during the Cold War," he told The Moscow Times.
He said the timing of the arrests sharply departed from a time-honored tradition by intelligence services to lay low before, during and immediately after major foreign policy efforts by national leaders in order to avoid spoiling them.
"It looks like the work of someone who is very powerful and in the political opposition to Obama, or a hawkish military and intelligence group not happy with the reset of relations with Russia," Gudkov said.
Another former top spook, Nikolai Kovalyov, pointed to a number of discrepancies in the Justice Department's case as proof that it was an attempt to undercut Obama's "reset" effort.
In addition to the timing of the arrests, Kovalyov said details in U.S. court papers about the suspects using invisible ink, fake documents and even transferring money by burying it in a glass jar for retrieval months later were "complete nonsense" and sounded like "a cheap detective novel," Interfax reported. Kovalyov, a former director of the Federal Security Service, heads the Duma's Veterans Committee.
The Foreign Intelligence Service refused to comment Tuesday.
The Cold War era saw several high-profile spy cases, dating back to the arrests of Russian agents like the Rosenberg couple in 1951 and Colonel Rudolf Abel in 1957.
More recently, senior FBI official Robert Hanssen was detained in February 2001 and sentenced to life in prison later that year for spying for the Soviet Union and then Russia for 15 years. His involvement with Russian intelligence was described by the Justice Department in 2002 as "possibly the worst intelligence disaster in U.S. history."
Hanssen was arrested two months after then-President Putin pardoned U.S. businessman Edmond Pope, who was sentenced in 2000 to 20 years in prison on charges of collecting information about a secret Russian torpedo.
The Hanssen and Pope scandals did not prevent a brief rapprochement between Moscow and Washington later in 2001 after the Sept. 11 terrorist attacks against the United States and Putin's offer to help in the subsequent "war on terror."
Bloomberg: ‘Deep Cover’ Spies Worked Day Jobs to Glean Data for Russia
By David Glovin and David Voreacos
June 30 (Bloomberg) -- Day jobs held by three of the accused “deep-cover” Russian spies may have put them in contact with opinion makers, corporate executives or aspiring technology industry workers.
Donald Heathfield lived in a Cambridge, Massachusetts, apartment where he ran a management consulting company called Future Map. It claimed to have offices in Paris and Singapore, according to public databases and Future Map’s website. Vicky Pelaez wrote columns for El Diario La Prensa, the oldest Spanish-language newspaper in New York. Anna Chapman posted an online ad seeking “bright graduates” for an Internet startup.
Leon Aron, resident scholar and director of Russian studies at the Washington-based American Enterprise Institute, said he wasn’t surprised by the disclosure of the alleged “sleepers” or the jobs they took.
“This is a very soft, ill-defined, broad-netted search not for hard facts intelligence but to divine the internal workings of the American political system,” he said yesterday in a phone interview.
The three were among 10 people arrested June 28 who prosecutors said were part of a Russian spy ring that tried to infiltrate U.S. policy-making circles, according to two criminal complaints by the Federal Bureau of Investigation. An 11th suspect was arrested in Cyprus yesterday by local police.
‘Americanized’
The FBI said the people used false identities, coded communications, secret payments and clandestine movements to disguise their efforts to pass data to Russia and recruit sources. Some of the accused lived in the U.S. for more than 20 years, with the goal of becoming “Americanized” and passing intelligence back to Russia, according to the complaints.
“In addition to seeing how policy is made, it appears that they were also looking at how technology was made,” Aron said. “The Soviet Union and then Russia were always fascinated by why the U.S. constantly undergoes these explosions of new technologies and new knowledge.”
Court documents don’t identify the jobs of the suspects, who lived near New York City, Boston and Washington. Internet searches show that Heathfield, Pelaez and Chapman each worked in jobs that may have exposed them to potential sources of information.
Heathfield was chief executive officer of Future Map. The company’s website says its goal is “developing strategic proactivity.”
‘Global Repository’
“Our mission is to help governments, enterprises and international organizations better prepare for the future,” according to the website. “We strive to establish Future Map as a global repository of information about anticipated events.”
Calls to Future Map’s offices in Paris and Cambridge went unanswered. A man who answered the phone at the company’s Singapore headquarters said he was “stunned” by the news.
“I am extremely surprised” the man said, declining to provide his name. “I really don’t know what to make of it.”
According to the complaint, Heathfield and his wife, Tracey Foley, were directed by their controllers in Moscow to focus on turnover at the Central Intelligence Agency and the 2008 presidential election.
From his base near Harvard Square, Heathfield made contact with a former high-ranking U.S. government national security official, according to the complaint. In 2004, he met with an employee of the U.S. government “with regard to nuclear weapons research.”
Master’s Degree
Heathfield got a master’s degree in public administration in 2000 from Harvard University’s Kennedy School of Government, said school spokesman Jake Ackman.
Heathfield’s LinkedIn page says Future Map “enables governments and businesses to develop comprehensive preparedness systems and build a culture of strategic pro-activity and anticipatory leadership.”
From May 2000 to May 2006, Heathfield was also a partner at Global Partners Inc., a “global corporate business development and executive education consultancy,” according to the page on the business networking website.
His groups on his LinkedIn page include the Society of Competitive Intelligence Professionals, Business Intelligence Group and Strategic Business and Competitive Intelligence.
Pelaez wrote columns for El Diario, according to Ellen Shaffren, who lives in Yonkers, New York, across the street from Pelaez and her husband, Juan Lazaro, who was also arrested. Scott Mautner, the general counsel of Los Angeles-based ImpreMedia LLC, El Diario’s parent, declined to comment.
Fidel Castro
An Internet search reveals columns by Pelaez assailing the U.S. prison industry as practicing “slavery” and commenting on Fidel Castro’s regime in Cuba.
According to the complaint, Pelaez is a U.S. citizen born in Peru. The complaint cites instances in which she and Lazaro received tens of thousands of dollars in cash from contacts they met in an unidentified South American country while gathering information to send back to “Moscow Center,” the headquarters for Russian intelligence.
In 2002, Lazaro complained that Moscow Center was dismissive of his information because he didn’t identify his sources, according to the FBI.
“Put down any politician here,” Pelaez told him, according to the complaint.
Among those arrested were Cynthia and Richard Murphy of Montclair, New Jersey. The FBI said Cynthia Murphy had several work-related meetings with a “prominent New York-based financier” whose name is omitted from the arrest complaint. Superiors in Moscow instructed Murphy to work on the relationship and try to obtain foreign policy rumors and invitations to political events, according to the complaint.
Columbia MBA
Neighbors in Montclair said Richard Murphy appeared to be a stay-at-home dad with their two small children, and his wife got a graduate degree from Columbia University. A spokeswoman for Columbia Business School, Jane Trombley, said in an e-mail that Cynthia A. Murphy got a master’s of business administration last month.
Unlike nine others arrested on June 28, Chapman, 28, lived under her real name in New York City, according to the complaint. It cites her surreptitious communications through a private wireless network with Russian government officials, and says she agreed last weekend to deliver a fraudulent passport to a person she believed was an accomplice.
Chapman is listed in an online ad as the contact for a lower Manhattan company called PropertyFinder. The ad says an “Internet start-up” was seeking “ambitious” interns. A call to PropertyFinder wasn’t answered.
‘Love Start-Ups’
“This position is ideal for those that love start-ups and looking to create something that gives value, know how to, not scared to get in touch with clients, hardworking and prepared to do what it takes to succeed in New York City!” the ad said in fractured English.
Chapman’s LinkedIn page said she had been CEO of PropertyFinder since October 2006.
“Love launching innovative high-tech start-ups and building passionate teams to bring value into market!,” she wrote.
It said she is the founder of Domdot.ru, which it described as a “search engine in real estate for Russian speaking people.”
She wrote: “I have been involved in running all aspects of business, setting strategy for development, international expansion, people management, Investors reporting.”
Russian, English, German, French
Russian is Chapman’s native language, while she is fluent in English, conversational in German and has basic command of French, according to her LinkedIn page.
She said she worked at Barclays Plc in London from August 2004 to July 2005 in the position of “slave.” Barclays spokeswoman Monique Wise said the bank had no record of her working there.
Chapman also said she worked for two hedge funds and a private aviation firm, selling jets to companies and individuals in Russia and engaging in “high-end client interaction targeting senior executives and key decision makers.”
At the top of the online ad for PropertyFinder is a listing for two other jobs. One of them is for internships with the CIA.
The agents would be useful for “certain kinds of intelligence gathering,” said Kevin Ryan, executive director for research at the Belfer Center at Harvard’s Kennedy School.
“If you wanted to get yourself into the middle of a political party or company and work your way to the highest levels over time, then you could report back about what they’re thinking inside and what’s their intent,” Ryan said. “Those are the kinds of things that are hard to pick up just from reading about it in the press.”
The cases are U.S. v. Metsos; U.S. v. Chapman, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in New York at dglovin@; David Voreacos in Newark, New Jersey, at dvoreacos@.
Telegraph: Russian spy ring: Peruvian journalist among those arrested
A Peruvian journalist who has worked in New York for 20 years and is notorious for a kidnap scandal in Peru was among those arrested by the FBI for suspected membership of the alleged Russian spy ring.
Published: 6:00AM BST 30 Jun 2010
Vicky Pelaez, 55, was among 11 suspects who were allegedly dispatched by the Russian intelligence service for a long term operation to search and develop ties in US policy-making circles.
Ms Pelaez's family and friends on Tuesday released details of the FBI raid late Sunday in the northern New York suburb of Yonkers.
Ms Pelaez was detained along with her husband Juan Lazaro as they returned from a party.
"They took them out of the car and led them to two vehicles," her son Waldo Mariscal told La Prensa Spanish-language newspaper, his mother's employer.
He said FBI agents removed computers from the house and interrogated him about his parents' politics and finances.
"There were about 30 people searching the house," said Juan, another son.
The newspaper's editor, Manuel Avendano, said that Ms Pelaez was very controversial and had attracted both supporters and detractors.
She is best known for her opinion columns, which often criticize the US government.
Ms Peleaz left Peru after making her name at the Frecuencia Latina TV channel where she was renowned for her aggressive style.
In 1985 she made headlines for being kidnapped by and interviewing the communist Tupac Amaru Revolutionary Movement (MRTA).
Frecuencia Latina later sacked her for allegedly fabricating the kidnapping.
Ms Peleaz emigrated to the United States soon afterwards.
She appeared before a New York judge on Monday and was due to remain in detention until at least July 27.
The US Justice Department said Monday that 10 "deep-cover" suspects, accused of infiltrating US policymaking for the Kremlin, had been detained on suspicion of seeking details of US nuclear weapons and foreign policy.
Police in Cyprus arrested an 11th suspect trying to board an early Tuesday flight to Budapest.
Russia Today: Couple associated with Russian spy ring arrested in Arlington
30 June, 2010, 03:13
Two out of the ten people who are in federal custody, accused of acting as Russian intelligence agents, lived in Arlington, VA near the Pentagon.
The man who called himself Michael Zottoli along with his wife, who went by the name Patricia Mills, was living in a high rise building. It had a round-the-clock security guard and was footsteps away from a shopping mall, and across the street from a park. Most neighbors had the same reaction upon finding out the couple was arrested and accused of being Russian agents.
“It’s pretty shocking,” said Scott Inouye. “I didn’t think stuff like this still went on.”
“We’re not from the city so we were surprised,” said Erica Whitelaw, whose mother lived in the building. “The FBI is kind of a big deal.”
“That surprises me because I thought relations were a little bit better with Russia and the United States these days,” said Kathy Mizerak.
Witnesses say more than a dozen agents came into the building, known as “The River House,” Sunday night before arresting the couple and searching their apartment.
“My mom works with FEMA and she said she saw two FBI agents show their badges and go into the basement or go into the parking garage in the building and were looking for something,” Whitelaw said.
The couple has two small children who are now in the care of family friends.
Patricia Auxier said her friend lives on the same floor as the couple.
“She heard a loud knocking and so she looked out and they told her to get back inside and then she came out later and they told her that they had arrested two people and that everything was safe,” Auxier said.
The building is tucked in a neighborhood filled with single family homes, and quiet side streets with Neighborhood Watch, ironically reminding people there are watchful eyes all around.
Some neighbors have a view of the Pentagon from their apartment windows. Many of those in the neighborhood work, or used to work, for the US government.
“I worked for Central Intelligence and retired and was a Cold War worker,” said Frank Halligan.
“I noticed that the type of information that they were getting was kind of general, how the US works, economy, politics, rather than what’s the latest weapon or nuclear attack or where are your submarine forces deployed,” Halligan said.
John Henley was in the army for 20 years and worked for the Pentagon. Now he lives down the street and barely flinched when he heard the news.
“It’s been going on the whole time – whether China or Russia, North Korea, the while area – it don’t surprise me one bit,” Henley said.
Russia Today: US “lobby war” behind Russian spy charges
29 June, 2010, 18:29
As international special interest groups are vying for influence in the US government, the line between espionage and lobbying work is becoming dangerously vague.
The US Justice Department announced on Monday that 10 individuals were arrested on charges of working as “agents of a foreign government [i.e. Russia] without notifying the US attorney general,” a crime that carries a penalty of a maximum of five years in prison. Nine of the arrested individuals were also charged with money laundering.
Made to resemble some sort of storm front blowing in from the east, US media reported that the arrested individuals worked in “deep cover” in Boston, Montclair, New York and Arlington. An 11th suspect has been detained by Interpol in Cyprus and released on bail.
The Federal Bureau of Investigation (FBI) says that it has been collecting extensive electronic surveillance of the suspects “for years,” yet, as CNN reported, the arrested individuals “were not directly involved in obtaining US secrets themselves.”
The question now is: what exactly did these individuals do to attract the attention of the US intelligence community?
One of the suspects is Vicky Pelaez, who has been a columnist for the Spanish-language “El Dario" newspaper for more than 20 years. Pelaez has covered a wide range of touchy topics, ranging from local and international politics to immigration issues.
Since one of the primary functions of a political reporter is to make connections and ask penetrating questions, was Pelaez singled out for suspicion by simply trying to do her job? After all, “infiltrating policy-making circles” is exactly what people in the journalistic and lobbying community do in order to fulfill the requirements of their respective jobs.
It is also the work of reporters and lobbyists to “learn about US weapons, diplomatic strategy and politics.” But simply asking questions about such subjects does not automatically make a person a spy.
Another one of the arrested individuals, Anna Chapman, was said to have “met with an individual purporting to be a Russian Government official in Manhattan, New York, at which she received a fraudulent passport,” according to the official criminal report. Chapman was also arrested for using her laptop computer inside a coffee shop at the same time that a Russian Government official was driving by in a minivan.
CNN has already reported that Chapman never "fulfilled the mission" of delivering the fraudulent passport that the undercover FBI agent gave to her.
“She met an undercover FBI agent posing as a Russian who set up an urgent meeting asking her to deliver a passport,” reported Deborah Feyerick, a commentator with CNN. “This was her first person-to-person mission, but it [the passport delivery] never happened.”
Moscow has already called the charges “contradictory,” and is demanding more information on the criminal proceedings from their US counterparts.
Then there is the case of Donald Heathfield and his quotation-marked wife Tracey Foley, and their two teenage sons.
Heathfield is the CEO of international consulting and management development firm Global Partners Inc., which Jeff Stein of The Washington Post described as “a beehive of cutting-edge technology firms with close ties to MIT and the Pentagon.” He also operates Future Maps, “a software system that helps map a picture of anticipated future events,” Wicked Local Cambridge reported.
Heathfield's Linked-in page shows his affiliation with over 30 professional alumni, business, academic and international relations associations.
Are some US-based groups getting too uncomfortable with Russians moving into such positions of influence?
Bad timing for a scandal
Russian Foreign Minister Sergey Lavrov on Tuesday provided a tongue-in-cheek comment over the curious timing of the arrests, while expressing his hope that the US side will explain their actions.
"They have not explained anything to us. I hope they will do so,” Lavrov, who is meeting with officials in Jerusalem, told a news conference. “The moment when all this was done was chosen quite smartly.”
Smartly, indeed. After all, just last week Russian President Dmitry Medvedev was in California, where he paid a visit to the hi-tech capital of Silicon Valley. There, he met with the leaders of various IT companies, while breaking ground on a number of ambitious virtual projects between Russian and US companies.
Russia, with its rich pool of computer engineers, is in the process of building its very own Silicon Valley in an effort to keep its IT talent gainfully employed at home, while perhaps tempting Russians abroad with the new opportunities in the Motherland. Whether the United States perceives Russia’s ambitious program of modernization as an opportunity or a challenge remains an open question.
During the Washington leg of his US visit, Medvedev and US President Barack Obama gave reporters a memorable photo opportunity inside a Washington diner as the two men enjoyed a light-hearted, all-American meal of hamburgers and French fries.
Indeed, given the good-humored atmosphere between the two presidents, it looked as if the US-Russian “reset” was not just an empty slogan to hide deep divisions between Moscow and Washington. It was the real thing. Although this unfortunate setback on the reset may blow over like a brisk summer rain, it could snowball into something that neither country wants nor needs – especially as officials in both countries are getting ready to ratify the START arms reduction treaty.
Why the hysteria over “secret agents”
In this particular case, the arrested individuals have been charged with “conspiring to act as unlawful agents,” as opposed to full-blown, Tom Clancy-esque spying. According to US legal code, there is nothing illegal about “an agent of a foreign government” working in the United States, so long as the individual notifies the US Attorney Generals Office of their activities.
Click to enlarge
“This is kind of a gray area, because we do have the Foreign Agents Registration Act in the United States,” Wayne Madsen, an investigative journalist and former NSA analyst, told RT. “We have many lobbyists in Washington, DC, who act as ‘agents for foreign governments.’ Now, if that’s what these individuals were doing [lobbying] it’s going to be very hard to pin espionage.”
The American Israel Public Affairs Committee (AIPAC), for example, the largest and most powerful foreign lobby group now working in the US, employs hundreds of “agents of a foreign government” to represent the interests of Israel before the US Congress, yet few people would consider them spies.
According to Section 951, Title 18 of the US Code, “Whoever, other than a diplomatic or consular officer or attache, acts in the United States as an agent of a foreign government without prior notification to the Attorney General…shall be fined under this title or imprisoned not more than ten years, or both.”
The amendment, however, also relieves the US attorney general’s office of all responsibility connected with its [hypothetical] failure to provide a copy of the registration to the US Secretary of State.
“The Attorney General shall, upon receipt, promptly transmit one copy of each notification statement filed under this section to the Secretary of State for such comment and use as the Secretary of State may determine to be appropriate from the point of view of the foreign relations of the United States.
“Failure of the Attorney General to do so shall not be a bar to prosecution under this section.”
In other words, the Attorney General could fail to notify the US Secretary of State as to the activities of a specific individual or group, yet bear no legal responsibility for the oversight. At this point, it would be the responsibility of the individuals to prove their innocence.
US Attorney General Eric Holden claims he never received such a notification regarding the arrested individuals. So now the question must be asked: did somebody fumble the ball – knowingly or unknowingly – as the Bush administration handed off executive responsibility to the Obama White House?
Now, Obama’s political opponents – and there are many – may be conspiring to sabotage the American president’s efforts to reset relations with Russia, which is integral to Moscow and Washington signing the START treaty. How much these new revelations will harm those efforts remains to be seen.
Gennady Gudkov, vice chairman of the Duma Security Committee, argues that this new spy scandal is possibly a provocation by the "anti-Obama" coalition, or co-ordinated activities on behalf of the American authorities. Based on those criteria, Russia should consider its response carefully, Gudkov said in his interview with "Ekho Moskvy" radio station.
Gudkov also stressed that this whole story needs to be thoroughly analyzed before any decision is made. Since US officials have only released bits and pieces of these 11 different stories, this seems to be excellent advice.
Finally, there are reports of a decrypted message from Moscow to two of the suspects, apparently reminding them that they were sent to the United States for "long-term service."
"Your education, bank accounts, car, house, etc. – all these serve one goal: fulfill your main mission, i.e., to search and develop ties in policymaking circles in the US and send intels back to center," the alleged document reads.
Such a message is strange to say the least. To suggest that these individuals, who allegedly received extensive training, needed a reminder from their handlers of their mission sounds more like poorly scripted fiction than true espionage. Even a civilian arm-chair observer can understand the inherent risk of dispatching a letter – even coded – that basically outlines the entire mission, not to mention outing the agents.
Why now?
The big question on everybody’s minds in Moscow is: why now? Why did the FBI, after allegedly conducting “multi-year” surveillance of these individuals, wait until the Russian president was just exiting the United States to drop this stink bomb? Indeed, the timing of this scandalous news seems too “perfect” to be merely coincidental.
For that answer, we must go to the very tip of the iceberg of US political circles, to the very individuals really calling the shots in America. Who are these individuals? Well, for starters there is America’s extremely powerful lobbying community, which has one real objective: to sway US foreign policy, which has become dramatically militant over the last decade.
Russians may not fully appreciate this unique part of the US political process, which relies much more on special-interest spending than on any "general will" of the people.
It is these deep-pocketed groups who fill the campaign war chests of American politicians, and it goes without saying that they do not donate their money without expecting some sort of favors in return. And with big global issues on the front burner – not least of all the question of what to do with Iran, which some argue is trying to acquire nuclear weapons – many people could be accused of “infiltrating US foreign policy circles.”
So there is the possibility – however difficult to prove – that one of these powerful lobby groups called in one of their political debts – at Russia’s expense.
Indeed, those “special interests” who now enjoy the ultimate legal power of influencing US politicians in order to support specific legislation, not to mention foreign policy directives, will not stand by idly as Russians attempt to make their voice heard in Washington. It is possible that other foreign lobbies will go to great extremes to reinforce the image of Russians as “spies” in a smear campaign that will make it politically unattractive for US politicians to “do business” with America’s growing Russian community.
But in the end, what this “spy case” proves is not that the Cold War winds have returned, but that the American people must work to regain control of their political system, which has become too financially dependent upon the legal or illegal “agents of foreign governments.”
The only political lobby that should be permitted to influence the halls of Washington should be “We the American People.” All others need not apply.
RIA: Russian parliament passes bill banning drink-driving outright
12:25 30/06/2010
MOSCOW, June 30 (RIA Novosti) - The lower house of the Russian parliament on Wednesday passed in the second reading a bill to ban drink-driving outright.
The legislation is part of a larger campaign to cut down the number of road accidents caused by drink-driving.
The bill forbids motorists from touching a drop of alcohol before getting behind the wheel.
Critics say innocent drivers could be penalized by the new law since beverages containing small amounts of alcohol, such as dairy products made from fermented milk and bread-based kvass, are popular in Russia.
Other Russia to Form Official Political Party
June 29th, 2010
The Other Russia opposition coalition has announced that it will be forming its own political party to participate in upcoming parliamentary elections, Kasparov.ru reports.
Aleksandr Averin, member of the executive committee of the coalition, said on Tuesday that a founding congress would be held for the party on July 10. There, participants will adopt a charter and party program, he said. The coalition is confident that enough members can be recruited in the months leading up to the October elections to reach the minimum necessary for the official federal registration required for parties that wish to participate in Russian elections.
Other Russia cofounder and head of the banned National Bolshevik Party, Eduard Limonov, will head the organizational committee, Averin added.
“We are going to demand the abolition of registration for political parties, and also participation in elections for all those who wish to,” Limonov said. He called the electoral campaign the Other Russia’s “second front,” the first being the “Strategy 31″ rallies, held routinely in defense of the constitutional right to free assembly.
Limonov added that he expects the government to do everything possible to keep the opposition party out of the October elections.
A variety of Russian opposition groups have recently begun making renewed attempts to create officially registered political parties. The opposition movement Solidarity, lead in part by former Deputy Prime Minister Boris Nemtsov, announced in May that it would be creating its own party to operate side-by-side with the movement. The groups Democratic Choice and the National Patriots have also made similar decisions in the past few months.
The requirement for the federal registration of political parties is widely criticized by Russian opposition groups as a tool used by the government to keep political competition out of the electoral system. Altogether seven parties are officially registered and allowed to participate in elections: the Kremlin-backed United Russia party, the Communist Party, the Liberal Democratic Party, Patriots of Russia, Yabloko, A Just Russia, and Right Cause. This is down from 15 parties in 2008, 19 in 2006, and 35 earlier in 2006. The number decreased following changes in federal registration procedures over the course of those years.
While some opposition parties, such as three Bolshevik-related parties, are banned outright in Russia, many are simply never able to register. Andrei Savelyov, leader of the unregistered Great Russia, told the newspaper Kommersant that his own party has no such chance. That said, he hopes that “the government will come to its senses and allow citizens to exercise political freedoms.”
Vladimir Ryzhkov, representative of the unregistered Republican Party, expressed similar doubts. “Our government, and most of all the president and prime minister, grossly trample on the constitution and deprive a significant part of the political forces and society of the opportunity to participate in elections,” he told Kommersant. “In these conditions, it is the task of the opposition to explain to the population that this is not an election, but a farce.”
Dmitri Badovsky, Deputy Director of the Institute of Social Systems, agreed that it was unlikely that unregistered parties would have any success in either the registration process or, theoretically, the actual elections. “For the survival of the political arena, the Kremlin will enable a sharp activation of the small parties that are already registered, most of all Right Cause,” he explained.
Moscow Times: Moscow Should Not Play by NATO’s Rules
30 June 2010
By Alexei Pushkov
Today, relations between Russia and the West focus mainly on the “reset,” as well as cooperation on modernization and Western investments in Russia. This is a welcome change from the Cold War rhetoric of the past years under the administration of President George W. Bush. But unfortunately, we are not seeing real, substantive changes in the West’s approach to Russia. The glossy images of Presidents Barack Obama and Dmitry Medvedev smiling, eating hamburgers together and slapping each other on the back are good photo ops, but they remain superficial.
Many in the West see the reset as just another way to secure Russia’s support on issues critical to the West without seriously reconsidering strategy toward Russia. For these “pragmatists,” the reset is mostly a one-way street. The NATO Parliamentary Assembly meeting in late May in Riga was a vivid example of the West’s pragmatic approach to Russia.
“Let’s keep our powder dry!” exclaimed Bruce George, the head of the British delegation, as the meeting concluded.
Some thought that it was a joke, but as the Russian saying goes, every joke is half true. The truth is that 13 years after the founding act between Russia and NATO was signed in Paris, there is much more suspicion than trust between the two sides. True, some progress has been made, but it seems to be limited to joint programs of tactical importance — for example, Russia-NATO operations to save sailors in the event of a crisis on the seas. But when it comes to strategic goals, the two sides are worlds apart.
I was the Russian side’s chief speaker at the Riga meeting, and it was clear to me that Russia and NATO are still very much speaking different languages.
The first difference is the attitude toward NATO’s eastward expansion. The 2010 Russian military doctrine, approved by Medvedev in February, states that NATO enlargement constitutes Russia’s main external military danger. This opinion is shared by most Russians, who were galvanized by NATO’s efforts to offer membership to Ukraine and Georgia.
NATO Secretary-General Anders Fogh Rasmussen dismisses Russia’s concerns as “old thinking,” but he should pay more attention to the valid reasons why NATO expansion is still considered a threat to Russia if he is serious about promoting partnership between Brussels and Moscow.
NATO expansion created the political divide between Russia and the West that we are facing today. It buried the hopes of the early 1990s that the European continent would no longer be divided by walls, physical or political. Thus, former Soviet leader Mikhail Gorbachev’s romantic idea of a “common European house” failed to come true.
To be sure, the Obama administration has put NATO’s eastward expansion on the back burner. But this is only because he does not want to spoil the prospects of further cooperation with Russia on pressing U.S. foreign policy issues, such as Russian support for sanctions on Iran and transportation corridors to Afghanistan through Russian territory. Obama’s seemingly softer stance on NATO expansion, however, does not mean that the problem has disappeared. In fact, at the Riga meeting, Rasmussen repeated once again NATO’s commitment to an “open-door” policy for new members.
NATO often speaks of itself as an “alliance of values” — one that promotes freedom and democracy. But if NATO wants to present itself this way, it should ask the citizens of Ukraine whether they want to join the alliance or not. The answer is well-known and has been confirmed in many polls: The majority of Ukrainians do not want membership.
The second problem is the propensity of Western leaders to point to Russia’s “old thinking” in every possible situation. If, for example, Russia claims that NATO is not just a political alliance but a military one as well, NATO calls this “a Cold War mentality” on Russia’s part, despite the fact that the alliance has started two military campaigns in the past 12 years — in Kosovo and Afghanistan. What’s more, NATO’s military capacity in Europe is four times greater than Russia’s. The military budget of the leading NATO member — the United States — is 10 times greater than Russia’s.
In answer to these concerns, Rasmussen always says, “NATO will never attack Russia.” But Rasmussen is missing the point. The potential danger that stated in the Russian military doctrine is not NATO militarily attacking Russia. The potential danger for Russia is the creation of a strategic framework in Europe that undermines Russia’s security and national interests because it brings NATO military infrastructure closer to Russian borders, and it creates a NATO-centric system of collective security without Russia’s participation.
Arrogance is not a good foundation for establishing a new relationship. When NATO accuses its Russian partner of “old thinking,” it presumes that its own thinking is completely modern. But is it? While Obama refrains from these statements, quite a few Western leaders, such as Rasmussen, all too often speak of Russia’s “Cold War mentality.”
Or recall former British Prime Minister Tony Blair, who loved to accuse Russia of “not playing by the rules.” Whose rules did he have in mind? And who exactly established those rules? Was Blair playing by the rules when he, together with Bush, initiated a military campaign against United Nations member without cause and in violation of the UN Charter. Ironically, Blair’s “rules” have not been accepted by its own nation. He was ousted from Downing Street and will be most remembered for how he deceived his own citizens.
When asked in Riga about the purpose and motives of placing roughly 100 U.S. Patriot missiles in Morag, Poland, which is located 80 kilometers from the Russian border, Rasmussen said, “I would urge Russia to forget old Cold War rhetoric.” What he really meant, of course, was: “Stop asking questions, accept whatever NATO does and unconditionally support the alliance on key issues such as Iran and Afghanistan.”
In the face of very difficult global challenges, both sides should move toward a new thinking. A good place to start would be to develop a joint missile defense system in Europe based on shared information and technology and grounded in the concept of a truly pan-European collective security structure that will protect against common threats. Some U.S. officials promise that this joint missile defense system will be a “game-changer” in NATO-
Russian relations. But will it remain just a promise?
There is no such thing as universal truth — at least not in politics — and nobody can lay claim to possess it. The ghosts of the past are to be found not just in the Russian psyche. The West also needs to bury the past if we are to achieve a real, substantive “reset” and not a fake one. As for NATO’s call to “keep NATO’s powder dry,” this is definitely not a good example of the alliance’s “new thinking.”
Alexei Pushkov, who was a speechwriter for Mikhail Gorbachev from 1988 to 1991, is anchor of “Postscript,” a political show on TV Center, professor of diplomacy at the Moscow State Institute of International Relations and director of the Institute of Contemporary International Problems at the Diplomatic Academy of the Foreign Ministry.
Jamestown: Crisis in Eurasia: Russia’s Sphere of Privileged Inaction
June 30, 2010
Roger McDermot
Just as the worst crisis since the events in Osh in 1990 has erupted in southern Kyrgyzstan, resulting in bloodshed and large-scale internal displacement of ethnic Uzbeks, the Russian-led Collective Security Treaty Organization (CSTO) has also faced its most severe test to date.
Repeated requests from the leader of the Kyrgyz provisional government, Roza Otunbayeva, for Russian military intervention to restore order inevitably resulted in the issue being considered by the CSTO. Nevertheless, Moscow’s handling of the crisis, particularly the inaction of the CSTO in avoiding the deployment of peacekeepers and preferring instead to offer low-key support, expressing the hope that the Kyrgyz authorities might prove able in the longer term to regain control, exposed deep divisions within the CSTO.
Russian President, Dmitry Medvedev, ordered the deployment of a reinforced battalion from the 31st Air Assault Brigade to protect personnel at the CSTO base in Kant. The 31st Air Assault Brigade is also assigned to the CSTO Collective Rapid Reaction Forces (CORF) and remains within less than an hour’s reach of Jalalabad. However, numerous Russian commentators were scathing about the decision against CSTO military intervention. Some accused Moscow of political impotence, while others questioned the justification for the CSTO’s existence. Konstantin Remchukov, owner and editor-in-chief of Nezavisimaya Gazeta, regarded the Kyrgyz crisis as a test for how quickly the Russian government might act, and lamented deferring any decision to militarily intervene on a CSTO mandate as unnecessary delay. He suggested that a CSTO mandate from the UN was urgently required, in order to “stand between the warring sides” (Ekho Moskvy, June 15).
Reaction to the statement by Nikolay Bordyuzha, CSTO Secretary-General, that there was no question of sending peacekeepers to southern Kyrgyzstan, provoked speculation as to whether Russia still possesses such capabilities. In her program Kod Dostupa (Access Code) on June 19, Yuliya Latynina asserted that the Kyrgyz crisis revealed that Moscow pursues a foreign policy which creates problems for its neighbors which it is simply unable to resolve. Paradoxically, “what we used as a pretext for sending troops to South Ossetia happened for real in Kyrgyzstan,” she said, adding that she did not support sending the Russian army into Kyrgyzstan “for one simple reason –we have nobody to send” (Ekho Moskvy, June, 18-20).
On June 22, Alexander Golts, Deputy-Editor of Ezhednevny Zhurnal, portraying the CSTO as a dying organization and in essence a “paper tiger,” suggested that the crisis had exposed the hollowness of the neo-imperial Russian claims to establish a “zone of privileged interests” in the post-Soviet space. He highlighted that such claims must be adequately backed-up by a willingness to assume responsibility and act decisively. Within the former Soviet Union, he argued, no state can actually rely upon Russian assistance in a real emergency. Then, unlike many observers, Golts raised the taboo of the wider implications of the CSTO’s seeming paralysis: the China factor:
“The conflict in Kyrgyzstan has demonstrated that Russia is incapable of being even a regional leader. Although the Kremlin is obsessed with US interference in the region, their real concern should be that China will fill the vacuum and become the region’s leader. The Chinese are in a much better position to pick up the ball that the Kremlin has dropped in Central Asia” (The Moscow Times, June 22).
Given the growing momentum in the rise of China, and the political and security sensitivity this arouses in Moscow, the reasons for inaction, or avoidance of immediate military intervention must be understood in order to determine how Moscow might act should the Kyrgyz provisional government fail to establish durable domestic stability.
The reticence to deploy military forces was rooted in three key interlinked factors: legality (bilateral and multilateral), the complexity of devising the parameters of the mission, and the affordability of an open-ended commitment. At a bilateral level, any deployment of Russian troops would have required evidence that Russian citizens residing in Kyrgyzstan faced imminent danger, which appeared absent. Also, there is the question of the legitimacy of Otunbayeva’s request, since it may well have been technically illegal. Laying aside the legitimacy issue faced by her provisional government, requesting the deployment of foreign troops required a written appeal by the head of state ratified or supported by parliament, as well as proof that the intervention was necessary. Yevgeniya Voyko, an expert in the Center for Current Political Conditions, used this argument to highlight the inability of the current Kyrgyz leadership to legally request such assistance from the international community: “had Kyrgyzstan legitimate institutions of power at this time, it is essential for the start of a peacekeeping military operation along UN lines to furnish proof of threats to territorial integrity or of outside attack. There has been no attack, and the threat to Kyrgyzstan's integrity is hypothetical.” However, some Duma members said that Moscow had to act, and alleged that Otunbayeva had confirmed that ethnic Russians and Tatars were among the dead (Nezavisimaya Gazeta, June 17).
Azhdar Kurtov, an expert in the Russian Strategic Studies Institute, stressed that a firm bilateral agreement would need to be in place to facilitate Moscow’s deployment of peacekeepers. Such forces could not simply be sent to a hypothetical dividing line, but must actually deploy across a large swath of territory and place the border under control. Kurtov noted that Bishkek had not consented to such terms (Nezavisimaya Gazeta, June 17).
Legality issues were also foremost in the deliberations of the CSTO: its charter would not permit such forces to intervene in an internal conflict, which could be perceived as violating the country’s sovereignty. This was the fundamental sticking point, and efforts to convince its secretariat that the conflict was orchestrated externally did not quite fit the criteria for justifying intervention. This might elicit further discussion within the organization, though its members may prove reluctant to open up the prospect of CSTO involvement in the internal affairs of a member state. Former Russian Interior Minister, Army-General Anatoliy Kulikov, referring to the events in Kyrgyzstan, said it could compel revision of the CSTO charter to deal with internal threats. He also recommended that interior troops should feature among future CSTO peacekeepers, but admitted that both proposals faced difficulties (ITAR-TASS, June 18).
Affordability and defining the mission also dissuaded Moscow from embarking upon such a risky policy. Russian Defense Minister, Anatoliy Serdyukov, recently told the Duma that Russia cannot afford additional foreign bases, despite its efforts in 2009 to open a second base in southern Kyrgyzstan which resulted in opposition from Tashkent. A base would be a cheaper option in comparison with an open-ended commitment to police complex inter-ethnic instability with a potential to spread elsewhere in the Ferghana Valley. Mission planning issues were equally present. Separating the conflicting parties demands their identification, and clear rules of engagement: should a Russian peacekeeper open fire on an ethnic Kyrgyz or Uzbek, there could be claims of taking sides. Colonel (retired) Vitaliy Shlykov, a member of the Foreign and Defense Policy Council, said that Russia “has sufficient potential peacekeeping forces to settle the situation in southern Kyrgyzstan,” yet warned that its long-term success might depend on a thorough study of the Balkan experience, which scenario he believes is now unfolding in Kyrgyzstan (gazeta.ru, June 16).
Balkanizing Kyrgyzstan is arguably the least of Moscow’s concerns, while any sense of long-term loss of prestige or the semblance of regional leadership will be calibrated in the wider strategic environment: Russian military intervention in Central Asia raises the question in Moscow as to how this might be interpreted in Beijing –which demands the utmost caution.
Source:
2010-06-30 08:24
Reuters: PRESS DIGEST - Russia - June 30
MOSCOW, June 30 (Reuters) - The following are some of the leading stories in Russia's newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.
KOMMERSANT
kommersant.ru
• Russian President Dmitry Medvedev on Tuesday criticized leaders of political parties for embarrassingly low attendance at parliamentary sessions, the paper writes.
• Sixty percent of Russian banks are ready to disclose information about their operations to help the Central bank improve the transparency of Russia's banking system, the daily says.
VEDOMOSTI
vedomosti.ru
• Russian carmaker Avtovaz, which produces the Lada brand, has launched its own internet television channel, becoming the first non-media company in Russia to do so, the paper reports citing experts.
• Top management of PayPal is in talks with Russian internet payment companies to launch its business in Russia, the paper reports.
NEZAVISIMAYA GAZETA
ng.ru
• The Mayor of Irkutsk, who caused a shock by defeating Prime Minister Vladimir Putin's ruling United Russia party as a Communist candidate in March elections, has quit the Communists to join Putin's party, the paper writes.
VREMYA NOVOSTEI
vremya.ru
• Two militants were killed in a battle in Russia's restive region of Ingushetia on Tuesday, the paper writes.
• By the end of 2020 Russian specialists will create a prototype of a new super-heavy rocket to carry spaceships and space stations on an orbit, the daily writes.
ROSSIISKAYA GAZETA
rg.ru
• The daily runs an interview with Russia's Prosecutor General, Yuri Chaika, who says small and medium businesses in Russia need protection from corruption.
KOMSOMOLSKAYA PRAVDA
kp.ru
• Twelve teenagers from problem families escaped from a municipal summer camp in Saratov region because they said the conditions were unbearable, the paper reports.
Keywords: PRESS DIGEST Russia June 30 (--Writing by Ludmila Danilova, Reuters Messaging: ludmila.danilova.@, +7 495 775 1242)
National Economic Trends
Prime-Tass: Russia’s CBR board OKs keeping refinancing rate at current level
MOSCOW, Jun 30 (PRIME-TASS) -- The board of directors of the Central Bank of Russia (CBR) on Wednesday approved keeping the refinancing rate at its current level of 7.75%, the CBR’s public relations department said.
The refinancing rate is the rate charged by the CBR on loans to commercial banks. The CBR has been gradually cutting the refinancing rate since April 2009, when it was at 13%. The refinancing rate is currently at its lowest level since 1992.
The inflationary pressure remains moderate, the CBR said, adding that it estimated inflationary risks at an acceptable level in the several coming months, and this does not create prerequisites for tightening monetary policy. In addition, recovery trends remain in production, employment, and domestic demand, the bank said.
The central bank said its other rates also remained unchanged.
CBR First Deputy Chairman Alexei Ulyukayev said Tuesday that the CBR had no plans to further cut its refinancing rate this year.
End
30.06.2010 12:04
June 30, 2010 12:04
Interfax: Central Bank decides to leave interest rates unchanged (Part 2)
MOSCOW. June 30 (Interfax) - The board of directors of the Central Bank of Russia has decided to leave the refinancing rate and other interest rates unchanged, the Central Bank's press center reported on Wednesday.
The decision was made taking into account the overall trends in economic activity and the current monetary and lending situation, it said.
The Central Bank said in commentary that inflationary pressure remains moderate: inflation in April-June is measured at 6% annually. Although inflation is slowing at a lower pace, the Central Bank does not believe the inflationary risks are sufficient to justify any fiscal tightening.
Industrial activity, employment and consumer demand continue to recover. Industrial output increased in May, led by the processing industries, and growth in fixed capital investment accelerated, as did retail trade. The trend was also favorable on the labor market, with unemployment shrinking in May while real wages continued to rise.
Bank lending to the economy has been increasing since March and the interest rates on loans to the real sector are declining. Further expansion of lending will continue thanks to fiscal easing and due to the improving credit risk picture and stabilizing market expectations.
The current parameters of Central Bank interest rate policy provide for a balance between access to borrowing and inflation risks and are neutral from the standpoint of cross-border capital flows. The Central Bank expects the current interest rate levels to persist in coming months.
The Central Bank's board will next meet to discuss interest rate policy in July 2010.
The Central Bank made 14 quarter-point interest rate cuts beginning in 2009, the last one coming on June 1, 2010, which reduced the refinancing rate to 7.75%.
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Bloomberg: Russia Leaves Main Interest Rates Unchanged, Ends Easing Cycle
By Maria Levitov
June 30 (Bloomberg) -- Russia’s central bank left its main interest rates unchanged today, ending a 14-month easing cycle as the economic recovery gathers speed and inflation slows.
Bank Rossii left the refinancing rate at a record low 7.75 percent, it said on its website today, as forecast by all 15 economists in a Bloomberg survey. It also kept the repurchase rate charged on one- and seven-day loans unchanged at 6.75 percent. The regulator last trimmed rates on May 31.
“With stable inflation, continued economic and credit growth” the bank is likely to leave rates unchanged until the end of this year, VTB Capital economists Aleksandra Evtifyeva and Dmitry Fedotkin said in a note yesterday. Inflation is set to reach 7.6 percent at the year’s end, VTB Capital estimates.
The economy may expand 7 percent this year, Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill said on June 19, compared with the government’s 4 percent forecast. Higher commodity prices and domestic demand are helping the world’s biggest energy exporter recover from last year’s 7.9 percent slump, the biggest on record. Inflation this year will slow to between 5.5 percent and 6.5 percent, the government estimates.
“All the necessary conditions for a swifter economic recovery are emerging,” Prime Minister Vladimir Putin said at a Cabinet meeting on June 2. The 14 rate cuts in as many months helped boost lending, he said.
Lending Growth
Banks’ corporate lending grew 0.9 percent in April after stagnating the previous month and retail loan growth accelerated to 1 percent, according to the central bank. Even so, commercial bank lending remains at a “low” level, Bank Rossii Chairman Sergey Ignatiev said last month.
Cutting the refinancing rate further won’t boost lending, which is mainly constrained by “risks” in the real economy, Finance Minister Alexei Kudrin said on June 19.
“The refinancing rate won’t have a significant influence because it is lowered to increase liquidity on the market,” he said. “There is currently a lot of liquidity. The key, fundamental factors for lending are industry risks, the potential for growth.”
There is enough liquidity in the system as banks have 2 trillion rubles ($64 billion) of liquid assets, half of which is held in central bank bonds, Bank Rossii’s First Deputy Chairman Alexei Ulyukayev said yesterday.
Russian lending rates are “too low” and “do not reflect the real risks” in the economy, German Gref, chief executive officer of OAO Sberbank, the country’s biggest bank, said on June 1. Still, Sberbank doesn’t have immediate plans to raise the interest rates it offers on loans, according to Gref.
Preconditions
“Rates at the current level don’t create significant preconditions for capital inflow,” the central bank said in a statement last month.
Net capital inflow reached $10 billion in March through May and is set to continue in June, Ulyukayev said. There will be no net capital inflow for the year as a whole, after a $52.4 billion outflow last year, according to government estimates.
Bank Rossii’s “commitment” to a flexible exchange rate and free capital movement means inflows will make the ruble’s appreciation “inevitable,” ING Groep NV analyst Stanislav Ponomarenko said last month. The central bank has reduced the extent to which it steers the ruble to lessen the effects of currency moves on producers.
While the bank will continue to intervene on currency markets to “smooth out the volatility” of the ruble, “we will not set a target for the ruble’s nominal or real exchange rate,” Ulyukayev said yesterday.
The ruble may strengthen to 28 versus the dollar by the end of 2012 and maintain a “trend toward appreciation” in the next three years, according to a government report this month. The ruble may gain 20 percent in the next three years against the currencies of Russia’s major trading partners with the effects of inflation stripped out, the report said.
‘Real Problem’
The ruble’s appreciation “is a real problem for the Russian economy, but it’s still inevitable,” Deputy Finance Minister Dmitry Pankin said in an interview in London on June 24. “Appreciation will depend on the oil price. If the oil price is higher, there will be more pressure on ruble appreciation.”
Russia, which earns about $550 million from oil exports every day, will raise about $40 billion more in oil taxes for the budget than the government previously estimated, according to UralSib Financial Corp. calculations. The deficit is set to narrow to 5.4 percent of gross domestic product this year from 5.9 percent in 2009, the first shortfall in a decade.
Of the other BRIC countries, Brazil’s central bank on April 28 became the first in Latin America to increase borrowing costs in more than a year, raising the Selic rate to 9.5 percent from 8.75 percent. China and India have increased reserve requirements for banks to avoid stoking unsustainable lending.
Russia suffered a deeper recession than Brazil with a record 7.9 percent economic contraction last year. That compares with China’s growth of about 9 percent and India’s 7.2 percent.
To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@
Last Updated: June 30, 2010 03:03 EDT
2010-06-30 08:57
Reuters: Russian rouble flat, local demand supports
MOSCOW, June 30 (Reuters) - The Russian rouble was stable in early trade on Wednesday, as lingering domestic interest to sell dollars and still relatively strong oil prices outweighed a deterioration of the worsening in the external backdrop.
The central bank's widely expected decision to leave interest rates on hold at record lows after 13-month easing cycle also did not have an evident impact on the market, especially as the regulator made no mention of the rouble in the accompanying statement.
By 0717 GMT, the rouble was virtually unchanged from Tuesday's close of 34.37, holding away from long distance from June's low of 34.70.
Against the dollar, the rouble was flat at around 31.26 but lost 6 kopecks versus the euro to 38.21 .
Dealers say the rouble is being supported by major banks' clients, selling foreign currencies as the half-year end approaches. Russian exporters converting part of their dollar and euro revenues are also seen cushioning rouble losses.
The rouble's main benchmark -- oil prices -- slid to around $75.5-76.0 per barrel from levels above $78 seen earlier this week. However they remained relatively strong, supporting the rouble by ensuring Russia's capital account surplus.
"When oil prices are around $75, we can feel quite comfortable," said Anton Zakharov, analyst at Promsvyazbank.
Such support is expected to continue for now.
"As long as oil prices do not fall below $74 a barrel, the basket is unlikely to go above 34.50," said Andrey Khokhlov, chief dealer at Bank Intesa in Moscow.
According to the latest Reuters monthly poll published on Tuesday, the median forecast for the rouble/basket rate is 33.89 in one month and 33.48 by the year-end.
(Reporting by Andrey Ostroukh, editing by Mike Peacock) Keywords: RUSSIA ROUBLE/ (andrey.ostroukh@, +7 495 775 12 42)
RBC: Russia piles up foreign debt
RBC, 30.06.2010, Moscow 10:38:58.Russia's foreign public debt increased 11 percent to USD 41.781bn in January-May 2010 from USD 37.641bn as of January 1 of this year. In May alone, foreign public debt slid 0.3 percent, from USD 41.906.7bn as of May 1. At the same time, foreign debt rose 11.3 percent in the first four months of the year, according to the Finance Ministry.
By the same token, debt denominated in euros increased 29 percent from EUR 26.238bn as of January 1 to EUR 33.858bn as of June 1.
Coversely, debt to member states of the Paris Club decreased, not part of the restructuring, went down 14.6 percent to USD 853.5m from the beginning of the year, while non-Paris Club debt remained virtually unchanged at USD 1.811bn.
Russia's debt to countries of the former Council for Mutual Economic Assistance (COMECON) shrank 5.3 percent USD 1.231bn. Meanwhile, debt to international foreign financial organizations dropped 8 percent to USD 3.484bn or EUR 2.824bn.
Bloomberg: Russian May Corporate Loans Grew 1.9%, Most This Year (Update1)
By Maria Levitov
June 30 (Bloomberg) -- Russian corporate lending grew at the fastest pace this year in May as the economic recovery gained momentum, central bank data show.
Corporate loans rose 1.9 percent, compared with 0.9 percent in the previous month, Bank Rossii said in a report on its website today. Retail loans advanced 1.2 percent in May, compared with 1 percent the month before, it said. Retail deposits increased 1.7 percent, according to the report.
Improved global demand for commodities jump-started Russia’s economic recovery last year, while higher wages and lower savings boosted domestic consumption this year, Finance Minister Alexei Kudrin said yesterday.
The economy may expand 4 percent this year after last year’s record 7.9 percent contraction, he said. Bank Rossii First Deputy Chairman Alexei Ulyukayev estimated growth is set to reach “at least” 5 percent this year.
To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@
Last Updated: June 30, 2010 02:56 EDT
Izvestiya/Russia Today: Oil prices predicted to fall below minimum
Russia’s main export commodity has some unpleasant surprises in store
Pavel Arabov
The price for oil may fall below $60 per barrel (to the summer of 2005 level), says Finance Minister Aleksey Kudrin. This scenario is unlikely, say experts.
Read more
“In the next three years, the price will continue to decline to $60, and I am certain that it may be even lower. This is my forecast based on the existing statistics. We will be forced to stay at the $60 level for more than six months. Risks to our economy must be taken into consideration. The price of oil will be volatile, which is a crucial point for our country,” said Aleksey Kudrin.
Currently the price of “black gold” is much higher. Yesterday, a barrel of Brent grade oil (based on which the price for the Russian Urals grade is also determined) cost almost $76. Meanwhile, the level, indicated by the finance minister, is 21 per cent lower – the last time a barrel of oil cost this little was in the spring of 2009.
What is Aleksey Kurdin’s gloomy forecast based on? The main “provocateur” will be the increase of discount rates by the leading central banks of the world. This will lead to rising costs for lines of credit and reduction in the amount of money in the global economy.
But even such a gloomy scenario should not prevent Russia from eliminating its budget deficit in 2015. In 2009, the budget deficit was 5.9 per cent; this year, it is expected to be at 5.4 per cent, said Aleksey Kudrin. It will continue to decrease each year.
“During the G-20 summit, a very important decision was made that, in 2011, countries must begin fiscal consolidation – that is, phased reduction of their budget deficits,” said the finance minister. “Just as the other countries, Russia plans to determine its permanent loan model by 2015. With oil prices remaining at the level of $75 per barrel, we predict to see a zero budget deficit by 2015.”
It is hard to imagine that the price of oil will fall to $60 or less before the year 2012. In order for this to happen, the global economy must fall into stagnation, and inflation must be replaced by universal deflation, notes Dmitry Aleksandrov, head of the Analytical Department at Univer Capital.
“Currently, the oil market is shaped by a group of producers and consumers, who came to the understanding that production is not profitable at the price of $40 per barrel, while a price exceeding $80 will stall economic growth. Since the onset of the crisis, oil prices have not once moved outside this range for longer than a few days,”Agvan Mikaelyan, general director of FinExpertiza, agrees.
“Our finance minister has always very modestly assessed the prospect of rising oil prices. This is the correct approach when managing public finances. But the prevailing view right now is that the current level of $75 per barrel will be maintained. A zero deficit by 2015, in the current situation, looks perfectly attainable – with stringent control over spending and revenues,” says Dmitry Dorofeev, senior analyst at Ursa Capital.
Why would the minister “scare” the country with low oil prices? Kudrin is concerned with the continuously growing budget spending rates, suggests Agvan Mikaelyan. For now, our budget looks better than that of many other countries. But if we don’t begin to control spending tightly, we may find ourselves in a much worse position.
Russia Today: Euro to remain part of Russia’s reserves
30 June, 2010, 10:49
The future of the Euro is increasingly being questioned with budget woes in the EU undermining the currency. But Russia says it will continue to be a key part of its currency reserves.
Russia is bolstering Euro stability. It has assured the EU it will not turn away from the euro as a reserve currency. That means an estimated 200 billion Euro will remain a key part – about 45% – of the world’s third largest reserves. Finance Minister, Alexei Kudrin says it is important to take a long term perspective.
“I believe in the Euro, that it will strengthen. This will require efforts and time. It's important that EU country's governments made necessary decision and now it's important to have political support of the decisions made. In the mid to long term EU will strengthen its financial institutions.”
Developing countries like China – the world's largest reserve holder, Russia and India – are also in line to provide support for the EU currency, which has taken a 20% hit since early in the year as holder have sold off on concerns that the yawning budget deficits could trigger another financial system collapse, and that the necessary budget discipline could push the Eurozone economy back into recession even if the member nations have the political will to carry it out. Aleksey Moiseev, chief economist, at Renaissance Capital says that major policy shifts aren’t in the interest of any major holder of a currency, but that recent suggestions about broadening the composition of Russia’s reserves indicate some concern.
“All the global central banks are obviously limited in their ability to publicly make changes in their policy. So every change Russia will have to do is going to be a very careful one and here I refer to the central banks officials talking about diversification into a more stable currency like the Canadian and Australian dollars."
Another key factor often overlooked in the debate is what Russia could potentially shift its Euro holdings too. Including the Canadian or Australian dollars is not going to be a viable substitute for the European currency, and in both cases they reflect commodity exporters like Russia. The Swiss Franc could be another option but isn’t likely to be as liquid as central bankers would like. More than half the reserves are already in dollars, and the outlook for the US currency is anything but rosy once its budgetary woes are looked at more closely. The Japanese Yen reflects yet another budget disaster area. Russia has been buying gold, but at about $1250 per ounce there are plenty of analysts saying it is in a bubble and could easily slide, and there is the added question about how much gold can be accessed.
Despite the Euro's problems it's value remains around the level at which it was launched in 1999, yet still much higher than it's historical low and, Russia's gesture of support to its European partners may be key to realising future upside.
Business, Energy or Environmental regulations or discussions
Kommersant/Russia Today: Small changes in import regulations
Starting tomorrow, Russians should expect to see some small changes at the customs checkpoints
By Aleksandr Chernykh
The Customs Code of the Customs Union of Russia, Kazakhstan and Belarus comes into force tomorrow –official Minsk, however, has yet to ratify the document. Thus, the new law unifies import conditions from any country for only Russia and Kazakhstan. Russian nationals will not see any major changes: they will be able to import more duty-free goods, though at a lesser value.
Read more
The Customs Union of the three countries began operating officially on January 1, 2010; but, it will begin operating on practical terms only after the shared Customs Code comes into effect. On May 28, Russia and Kazakhstan signed the agreement on the Customs Code – this took place without Belarus, which failed to send its representatives to the signing. Minsk was linking the adoption of the document to a favorable, for the country, resolution of the question regarding export duties on oil and petroleum products within the union. Finally, after his June 1 meeting with the head of the Customs Union Commission, Igor Shuvalov, Aleksandr Lukashenko agreed to ratify the Customs Code agreement. The bill for the ratification of the Code was introduced in the Belarusian parliament on June 8, but has yet to be addressed. Russian and Kazakh authorities decided not to wait for Belarus and ratified the document. “The Customs Code of the Customs Union will come into force on July 1,” Dmitry Kotikov, Federal Customs Service spokesman, told Kommersant yesterday.
One of the most difficult issues in drafting the Code dealt with customs duties on imported autos by individuals. In Belarus, duties are lower than in the other member states of the Customs Union. This issue remains to be resolved: it is expected that by 2020, unified duty rates, adjusted to the Russian level, will be applied in all countries. For now, each country continues to have its own rates. Meanwhile, cars that are imported to Russia through Belarus and Kazakhstan must be resold only after a surcharge is added, which adjusts the price in accordance to the level of Russian duty rates.
The new code will change import procedures for individuals, and will be applied to all goods coming from abroad — and not only from the member states of the Customs Union. Before, a person could bring into the country 35 kg of duty-free goods, of a total value of 65,000 rubles. Now, the norms for duty-free importation have increased to 50 kg, although the total value of goods cannot exceed €1,500. Considering that the European currency currently costs 38 rubles, a person will be able to import only 57,000 rubles worth of goods duty-free. The duty rate for excess weight remains the same – 30% of the cost of the imported goods, but no less than €4 per 1 kg.
Rules for the importation of alcohol, including beer, will also change. Today, a Russian citizen, who is at least 18 years of age, may import or export 10 liters of alcohol, of which 2 liters are not subject to duties. Starting tomorrow, a person will be allowed to cross the border with no more than 5 liters of spirits, but the amount of duty-free alcohol will rise to 3 liters. Each liter, exceeding the specified amount, will cost €10 in duties. Moreover, a person may carry up to 5 kg of fish and seafood, and no more than 250 grams of Osetra caviar. If crossing the border by car, in addition to the fuel in the gas tank, a person may have 10 liters of fuel.
The Customs Code provisions only one document for the declaration of goods for personal use – the passenger customs declaration. Other forms for customs declarations, which are currently used in Russia, will be abolished.
In essence, the abolition of restrictions on the number of trips with duty-free items is the main change – before, transferring goods duty-free was allowed only once a week. Russian Union of Travel Industry spokeswoman Irina Turina believes that the new rules will not affect the habits of Russians traveling abroad.
“Now, people travel to Europe to shop, because it has a larger selection and cheaper goods,” she said. “But, people are buying for themselves, they are not purchasing 50 kg of clothing, but a lot less. Those, who buy for resale use cargo companies to import the goods.”
Read the article on the newspaper’s website (in Russian)
Troika Dialog: Federal Grid Company holds AGM
Troika Dialog
June 30, 2010
Federal Grid Company (FGC) held its AGM yesterday. There were several takeaways from the meeting.
_ The company has prepared an investment program for 2010•14 totaling R954 bln. FGC CEO Oleg Budargin had earlier said that investment would exceed R900 bln. The company has submitted its investment program to the Energy Ministry and expects approval by August 15. The proposed program has been designed for the five•year regulatory period from 2011. FGC's current investment program covering 2010•12 stands at R519 bln and would be included in the five•year program, so annual implied capex would be higher in 2013•14.
_ FGC could place its treasury stock (currently totaling around 1%) as part of the company's plans to get a listing on a foreign stock exchange. The listing is planned for 4Q10 and FGC has expressed a preference for a listing on the Frankfurt Stock Exchange.
_ The company would like to attract a strategic investor, but any decision would have to wait while the appropriate legislative amendments are put in place.
_ TheBoDhasapprovedtheissuanceofanadditional28.29blnsharesatR0.5pershare (above the current market price), which represents only 2.3% of the current number of shares. The record date is June 28, 2010 (the placement is planned to start in September). FGC plans to receive circa R11.2 bln from the state via the placement, and the funds have been earmarked for it in the federal budget. Budargin said that the management does not envision issuing new shares to raise funds in the future.
We regard the comments made at the AGM as slightly positive for FGC's price share. However, the key concern now is whether the government plans to cardinally change the regulatory parameters already set out in case a cap is introduced on RAB tariffs. In our view, a considerable change is unlikely for FGC. Given the massive capex program, the regulatory parameters should be adequate, but tariff growth could be smoothed during the new, longer five•year regulatory period versus the current three•year period. We reiterate our BUY recommendation on the stock.
Alexander Kotikov
UralSib: Federal Grid Company: Government continues to increase its stake
UralSib
June 30, 2010
Board approved additional share issue. Federal Grid Company (FGC; FEES - Hold) will place 28.3 bln new shares (2.3% of current and 2.2% of expanded share capital) to raise RUB14.1 bln ($451.9 mln), the company announced yesterday. The placement price has been set at RUB0.5/share ($0.016/share), which is 52% above the current market price. The placement starts in September 2010. The government has already allocated RUB11.2 bln ($359.0 mln) in the federal budget for the purchase of FGC shares. All proceeds from the placement will be used to finance capex, which amounts to $17 bln for 2010-2012.
Similar but larger placement completed recently. In January of this year FGC completed the placement of 80 bln shares (6.5% of current shareholder capital), and raised RUB40.2 bln ($1.3 bln). The government purchased most of this additional issue, as the place- ment price exceeded the market price of the stock. Currently the government holds a 79.11% stake in FGC.
Technically positive for minority shareholders. The fact that the placement price is 52% above the current market price and 22% above our target price is positive for FGC's minority shareholders, as this placement will not hurt their interests. However, given the small volume of the issue, we have made no changes to our model for FGC and confirm our Hold recommendation on the stock.
Matvey Taits
JUNE 29, 2010, 12:33 P.M. ET
DJ: Alstom: Signs Pact With Transmashholding On EP20 Locomotives
PARIS (Dow Jones)--French power and rail engineering group Alstom SA (ALO) and Russia's largest railway equipment manufacturer Transmashholding, or TMH, Tuesday signed a locomotive supply contract worth EUR450 million for Alstom.
The contract defines how Alstom and TMH will cooperate in a EUR1 billion order for 200 EP20 passenger locomotives awarded a month ago by Russian Railways to TMH, the two companies said in a statement.
Alstom and TMH have teamed up in a global partnership, which includes a 25% stake from Alstom in the holding company of TMH, the statement said.
Production of the locomotives will be carried out by TMH with technical support from Alstom in Novocherkassk, Russia.
Alstom didn't disclose the price of its stake in TMH. But on March 3, Alstom said it had agreed to take a 25% stake in Transmashholding with an initial payment of $75 million. At that time, Chief Executive Patrick Kron also said he expects Alstom could gain a "few hundred million" euros in revenue from a then-unspecified locomotive contract in Russia.
-By Angeline Benoit, Dow Jones Newswire; +331 40 17 1740; angeline.benoit@
VTB Capital: Russian Railways suggests tariff discounts for modern fleet
VTB Capital
30 June 2010
News: According to Interfax, Russian Railways CEO Vladimir Yakunin has suggested introducing discounts on the infrastructure & locomotive tariffs paid by railway operators to Russian Railways for cargo deliveries made using modern railcars. He expects this to be an incentive for private operators to upgrade their fleet, while Russian Railways will save on infrastructure maintenance.
Our View: Were this initiative to be approved, it would probably be positive for Globaltrans, which has one of the youngest fleets in the industry (its railcars are, on average, about six years old and the company is expanding primarily through acquiring new railcars). However, given that there are no details on either the initiative or the terms of its implementation, we see the news as neutral at the moment and suggest waiting until an official proposal has been released before coming to any judgement.
Elena Sakhnova
RIA: Russia's Sberbank plans to become top Ukrainian bank - chairman
11:59 30/06/2010
Russia's largest bank, Sberbank, plans to develop its network in Ukraine and become the market leader there, bank Chairman German Gref said.
"We plan to considerably expand our presence here [Ukraine] over the next few years and I think we will undoubtedly become the number one bank in Ukraine," he told reporters late on Tuesday after the opening ceremony of the bank's Yalta branch, Sberbanks' 11th in Ukraine.
Sberbank's wholly-owned Ukrainian subsidiary is now among the top 20 Ukrainian banks by assets.
Gref said that Sberbank was planning to develop its own network in Ukraine instead of buying one of the Ukrainian banks as was announced earlier.
"To buy an old network and then reinvest in it is a too expensive and is sometimes an unjustified deal," he added.
He also said that Sberbank was finalizing a deal to buy a resort on the Crimean Peninsula to be used mainly by bank employees but also by outside clients.
YALTA, June 30 (RIA Novosti)
UralSib: RusHydro: Ukranian hydro generation assets in focus
UralSib
June 29, 2010
RusHydro may acquire a stake in Ukrainian HPP. Following the an- nouncement of RusHydro's (HYDR - Buy) strategy to expand outside of Russia and acquire 5GW of installed capacity by 2020, RusHydro was mentioned by Deputy PM Igor Sechin as a potential participant in the modernization of the hydropower plant network on the Dnieper River in Ukraine. He said also that RusHydro may acquire a stake in Ukrainian hydro power assets, however, the size of the stake was not mentioned.
EBRD has already discussed these modernization projects. The EBRD discussed a project to modernize Ukraine's hydro power plants in April of this year. Ukrhydroenergo, which owns hydro power plants on the Dnieper River, is a state controlled company with a total installed capacity of 3.9 GW. The modernization project is estimated to cost as much as EUR635.2 mln, and the EBRD plans to finance up to EUR200 mln. The project has passed final review and is pending board approval in October.
Attractive assets but price is not clear. Ukraine's hydro generation assets would be a core strategic asset for RusHydro and lucrative assets for company's exposure in Eastern Europe. We consider this news speculatively positive for the company as we can expect a relatively low price for the asset, given the current high cost of capital in Ukraine.
Steel Guru: Russia to spend over USD 3 billion on port infrastructure
Wednesday, 30 Jun 2010
According to Mr Dmitry Morozov the head of Investments and Development Committee of Association of Sea Commercial Ports, about RUB 103 billion will be directed for development of Russian ports this year.
Investments of private businesses are expected to be higher 5.2 times as much of that from the federal budget.
Mr Morozov said the Federal Government has set aside RUB 15.64 billion for 2010-2015 investments in Russian ports development while private investments will be at RU 87 billion.
He also said the estimated investments in ports infrastructure may reach RUB 834 billion by 2015, adding that this number does not include funding for renovation and construction of access roads to the ports and border crossing posts.
(Sourced from en.portnews.ru)
Ottawa Citizen: Molson Coors targets Russia with Silver Bullet
Brewer sees big opportunity in world's fourth-largest market
By John Shmuel, Financial Post; with files from Reuters June 30, 2010 12:00 AM
Read more:
Molson Coors Brewing Co. is seeking to tap Russia's $21-billion beer market by launching Coors Light in the country this month.
The world's sixth-largest brewer announced Tuesday it had introduced its popular light beer in supermarkets, grocery stores and select bars in the Moscow region.
The brewer, which also makes Molson Canadian, Carling and Blue Moon, is trying to diversify beyond its core markets of Canada, Britain and the United States. It recently announced deals involving Spain, Vietnam and China.
Russia may be best known for vodka, but it is the world's fourth-largest beer market after China, the U.S. and Brazil. Average consumption per capita was about 71 litres last year, said Krishnan (Kandy) Anand, president of Molson Coors International.
"It is a market with great potential," Anand said. "Overall alcohol consumption in Russia is quite high, but beer's relative share of alcohol consumption is quite low. (However) beer growth is likely to continue to be robust over time."
Molson will manage marketing and advertising of the Coors Light brand, while a local company, Moscow Brewing Co, will brew and distribute the beer.
That positions Coors Light as an imported brand that is brewed domestically, meaning it will cost more than the main domestic brands that make up about 70 per cent of the market's volume, but less than the beers that are actually imported.
Anand did not discuss specific sales targets, except to say that Molson was aiming to capture at least a double-digit share of the premium segment of the Russian market within a few years.
That segment only makes up about 30 per cent of the total market, which Molson Coors estimated to be worth a total of $21 billion.
Molson Coors had 2009 sales of $4.43 billion, with the vast majority of that coming from the mature markets of Canada, Britain and the United States.
That has put it at a disadvantage when competing with global giants such as Anheuser-Busch InBev and SABMiller Plc.
Molson hired Anand last November to lead its international expansion.
He previously worked for Coca-Cola.
© Copyright (c) The Ottawa Citizen
Israeli Diamond: EU Court Weighs In on De Beers, Alrosa Diamond Dealing
[pic]30.06.10, 09:16 / World [pic]
The Court of Justice of the European Union has set aside a judgment by the General Court in favor of an EU Commission's decision, granting binding commitments offered by diamond giant De Beers to cease all purchases of rough diamonds from Russian mining power Alrosa.
A statement by Court said that Alrosa and De Beers "are active on the worldwide market for the production and supply of rough diamonds, on which they occupy the number two and number one positions respectively.
"In 2002 they notified the EU Commission of a trading agreement under which Alrosa undertook to supply rough diamonds to De Beers to the value of $800 million a year... In December 2004 Alrosa and De Beers proposed joint commitments to the Commission, providing for sales of rough diamonds by Alrosa to De Beers, to be reduced progressively to $275 million in 2010, and subsequently to be capped at that level. Those commitments were not accepted by the Commission."
In 2006, continued the statement, "De Beers individually offered new commitments to the Commission for the definitive cessation of all purchases of rough diamonds from Alrosa from 2009 (and on)," which the Commission accepted.
Nevertheless, in 2007 and following an appeal by Alrosa, the General Court annulled the Commission's decision, on the ground that it had failed to comply with the principle of proportionality, and had not respected Alrosa's right to be heard on the matter.
The Commission appealed to the Court of Justice, which found that the General Court infringed on the discretion enjoyed by the Commission, and "expressed its own differing assessment of the capability of the joint commitments to eliminate the competition problems identified by the Commission, before concluding that alternative solutions existed that were less onerous than a complete ban on dealings."
The Court consequently sets aside the judgment of the General Court, positioning itself to give final judgment in the matter and dismissing Alrosa's appeal.
For the full Court of Justice statement click here
RenCap: Renaissance Capital's 14th Annual Investor Conference: Russian utilities panel
Renaissance Capital
June 30, 2010
A panel discussion on Russian utilities, Utilities: Making the power sector financially self-sustaining, was held yesterday (29 June) as part of Renaissance Capital's 14th Annual Investor Conference.
Panelists: George Rizhinashvili - head of strategy and investment, RusHydro; Vladimir Shkatov - deputy CEO, Electricity Market Council; Alexey Demidov - deputy CEO and CFO, MRSK Holding; Sergei Tazin - CEO, Eon Russia Power; Andrew Wright - head of markets, Ofgem (England and Wales electricity and gas regulator); Mikhail Abyzov - chairman, Group E4; Mikhail Slobodin - president, Integrated Energy Systems (KES)
Major themes:
• The Russian government's recent introduction of caps on electricity tariff increases in 2011 and 2012 was seen by all the panelists to have undermined the prospects for profitability improvement in the near term.
• The caps introduced a new element of unpredictability for investors, which will - at best - only delay urgently needed new investment, in our view. The caps related to overall tariff increases for end-users, and it is not yet clear on which part of the sector the burden will fall. If the Federal Grid Company (FSK) were allowed its full 50% tariff increase, sharp cuts in generation and distribution tariffs would be needed.
• Negotiations with local regulators and governors over the introduction of regulatory-asset-base (RAB) tariff regulation - which had been nearly completed - have now been re-opened. Planned investment programmes for the distribution grids could be cut back, and the initial regulatory asset bases of those grids due to adopt RAB- based tariffs from 1 July 2010 might be affected. However, a proposal to drop RAB tariffs in favour of a return-on- investment system has been rejected by the regulator.
• The panel was unanimous in saying that whatever the short-term concerns, the sector has committed to full implementation of market-based price reform. There is no alternative to finding a fair balance of the interests of all stakeholders, so that the sector's companies can access urgently needed investment funds at a low cost of capital. Pilot introductions of RAB-based tariffs are generally perceived to be working well. The original timetable for liberalising generation prices will be adhered to, and up to 80% of output will be subject to market pricing from 1 July 2010.
Derek Weaving
RenCap: The relative demise of the dollar as funding currency of choice in favour of local markets
Renaissance Capital
June 30, 2010
During an interactive panel discussion yesterday (29 June) at Renaissance Capital's 14th Annual Investor Conference participants discussed current investment opportunities offered by the local market. The key highlights are:
• The current financial crisis was unique in that developed countries with the biggest imbalances were also affected. In this regard, emerging market (EM) countries and their respective financial markets had the opportunity to shine. Credit spreads for the biggest EM financial institutions (such as Sberbank) narrowed to levels comparable with those of developed market banks (such as Soci�t� G�n�rale).
• The pace of growth of Russia's domestic bond market in 2009 was significantly higher than the respective dynamic of the eurobond market for Russian borrowers. On the back of abundant rouble liquidity and historically low interest rates, the rouble bond market remained less volatile than global markets in 1H10. During 1H10, the biggest Russian borrowers start refocusing from external borrowings to rouble bond issuance.
• The fact that the Russian banking system is less dollarised than other CIS countries was mentioned as a positive for the Russian banking system. For example, the portion of forex deposits and lending in the Russian banking system is currently around 20% vs more than 50% for Ukraine and Kazakhstan. However, the level of dollarisation in some Latin America and Asian countries is even lower, providing their national financial systems with even greater stability.
• Rouble-denominated debt is a natural source of funding for companies that have most of the revenues in roubles. According to the panel, if these companies are making hard currency borrowings, they need to hedge their currency risks and the cost of hedging could mount during a crisis period.
• Developed and convenient infrastructures are necessary for attracting investors to local bond markets, with investor-friendly settlement systems and the absence of capital control limitations mentioned among the most important features of an attractive local marketplace.
Nikolay Podguzov
Activity in the Oil and Gas sector (including regulatory)
UralSib: Tax holidays for Eastern Siberia are over
UralSib
June 30, 2010
Government ends zero tax regime. Yesterday the government approved imposing a duty on exports of Eastern Siberian crude from July 1 in order to narrow a budget gap. The duty on previously exempt Eastern Siberian fields will amount $69.9/ton at an oil price of $71.28/bbl. This will have the biggest effect on Rosneft's Vankor field, TNK-BP's Verkhnechonsk field and Surgut- neftegas's Talakan field. We believe this formula will be in place for longer than zero export duties were used (1 February, 2010 - 30 June 2010). We believe this will reduce uncertainty and help oil companies to better plan their budgets. It is also possible that a similar formula will be adopted for Caspian oil produced by LUKOIL, which is now subject to the standard export duty.
New duty to be a third of the standard duty. Export duties are set according to certain adjustments to the standard export duty formula:
Standard formula: $29.2/ton + ($71.28/bbl - $25/bbl) * 0.65 * 7.3 = $248.8/ton;
New export duty for Eastern Siberia: ($71.28/bbl - $50/bbl) * 0.45 * 7.3 = $69.9/ton;
The new tax formula should apply to production at 22 fields included in the list of Eastern Siberia oil fields that fall under a special export duty regime. At the same time, according to the Finance Ministry, Rosneft's Vankor field is scheduled to be excluded from this list in 2011, TNK-BP's Verkhnechonsk field - in 2012 and Surgut's Talakan field - in 2013. What remains unclear though is the duration of the new regime, which according to the First Deputy Prime Minister should last until the projects reach an IRR of 15%. Another question is what will happen to the zero export duty if Urals blend crude falls below $50/bbl. Previously, we did not include the zero tax duty in our model, as we were absolutely confident that this regime was short lived. If we incorporate the new export duties in our model, this would result in a 4% lower 2010 EBITDA for Rosneft and approximately 2% lower EBITDA for TNK-BP and Surgutneftegas. The overall effect on our target prices would not be substantial.
Sentiment may be stronger than financial affect. We may see a short-term negative reaction by the market as well as down- grades of earnings estimates for the three oil names due to the elimination of the effect of zero export duties on Eastern Siberia oil. This negative reaction will likely be limited though as we believe the cancellation these zero export duties has by now been mostly priced-in. We retain our neutral view on the sector due to the inefficiency of the current tax regime, but at the present low share prices, we retain our Buy recommendations for Rosneft, TNK-BP and Surgutneftegas.
Victor Mishnyakov
Code: 6034
Type: News
IranOilGas: Caspian Sea oil developments to be regulated
Date: Wednesday, June 30, 2010
Source: Xinhua
Azerbaijan, Kazakhstan, Russia, Turkmenistan and Iran will sign a document to regulate offshore oil exploitation and protect environment at the Caspian Sea, said a Kazakh official.
In view of the serious consequences of the recent oil spill in the Gulf of Mexico, Caspian countries should produce a document to clearly define the responsibility of each country in case of an offshore accident, Kazakh Environment Minister Nurgali Ashimov told the country's lower house of parliament.
The five Caspian countries plan to sign a memorandum in the Kazakh capital of Astana this year.
In November 2003, the five Caspian countries signed a convention in Tehran to reduce and control pollution of the Caspian Sea.
Businessinsider: Mega Profit Tax Makes It Even Worse To Drill In Russia
Gus Lubin | Jun. 29, 2010, 11:28 AM
Read more:
Russia kept revenue high during the recession through windfall profits from the world's second largest oil industry. Now the Kremlin will increase taxes beyond its already-high take of nearly 80%.
The announced but unspecified new tax will apply to excess profits from several selected fields for a trial before going nationwide, according to Moscow Times. Fearful of the new tax, Russian oil companies are already postponing investments:
Without full clarity on taxation, state-run Rosneft cannot decide on its investment in remote fields in East Siberia, vice president Peter O'Brien said. Rosneft has said it could invest up to $1 billion in roads, pipelines and power lines in the area.
"We can produce oil at lower costs than in some other areas of the world, but for some of that — we can't make the investment decision yet," O'Brien said.
Russia was already a hostile environment for foreign oil companies, with BP losing money on a disastrous joint-venture and BP getting into an ugly feud with oligarchs. Naturally, this will encourage drilling in the comparatively cheap Gulf of Mexico.
But with major oil reserves and the world's largest gas reserves, Medvedev can dive head first into a petro-state future.
Alfa Bank: Rosneft CEO's contract expires but no replacement announced
Alfa Bank
June 30, 2010
bne: Bogdanchikov is believed to have fallen out with First Deputy PM Igor Sechin - the most powerful figure in Russia's oil sector - and has long been expected to be on his way. That he is still in the post despite the end of his contract is less a vote of confidence in him than an indication that factions in the Kremlin and beyond are still struggling over agreeing a successor.
Rosneft CEO's contract expired yesterday, but there has been no announcement that he has resigned or that a successor has been found, the press reports. Sergei Bogdanchikov will remain in his position until a replacement is found, company sources told Vedomosti and The Moscow Times. Some sources say his contract has been prolonged indefinitely, meaning he can remain until the BoD dismisses him or names a successor, in accordance with the company's charter. The press names Russian Deputy Energy Minister Sergei Kudryashov, ex-Stroitransgas head Alexander Ryazanov, and Rosneft VPs Sergei Tregub and Edward Khudaynatov, among others, as potential replacements for Mr. Bogdanchikov.
We believe this news will contribute to the uncertainty around the stock and may be one of the reasons behind Rosneft's underperformance yesterday, as it suggests there may be a power struggle among different groups vying to install their representative at the company. Any news regarding a resolution of this issue could be a positive catalyst.
Pavel Sorokin
UralSib: Surgutneftegas: Key takeaways from AGM
UralSib
June 29, 2010
Production begins to stabilize largely due to secondary recovery methods. On Friday Surgutneftegas (SNGS RX - Buy) held its annual general shareholders meeting. During the meeting, participants dis- cussed the company's operations in Western and Eastern Siberia. Production at Surgut has become more stable. In 2009 production declined only 3% versus a decline of 5% in 2008, driven by the utilization of secondary recovery methods (which accounted for 58% of total annual production), development of the Talakan project in Eastern Siberia, as well as three new fields that came on stream this year. We retain our positive view on the company's business and reiterate our Buy recom- mendation for the stock with a target price of $1.1/common share and $0.8/pref.
Victor Mishnyakov
Gazprom
Code: 6036
Type: News
IranOilGas: Russia's Gazprom Neft eyes Iran oil project
Date: Wednesday, June 30, 2010
Source:
Gazprom Neft is keen to conclude preliminary talks to develop the Iran’s Anran block’s oilfields (Azar & Changouleh) by the end of this summer.
Stating the above, Boris Zilbermints the deputy head of the Russian company added that the implementing the deal would depend on the United Nations changing its trade sanctions on the country, reported the Reuters.
In the related news, Iran’s oil ministry news agency was quoted Bahman Soroushi, the oil and gas production director at NIOC, as saying: “Negotiations to finalize terms of a contract to develop Azar oil field is underway and it is hoped the contract to develop the field to be signed in near future with a consortia consisting of domestic and foreign companies.”
APA: Russian energy giant to participate in Africa’s oil production
APA-Moscow (Russia) Gazprom Neft, the oil arm of Russian gas export monopoly Gazprom, plans to join large foreign production projects in various parts of the world, including Africa, the Chief Executive Officer Alexander Dyukov said here on Tuesday.
"We are expanding our production business abroad and planning to join several large foreign projects," he said.
The company’s development strategy says that it plans to produce 100 million metric tons of oil equivalent by 2020, with about 10 million metric tons to be produced abroad, Dyukov said.
Gazprom Neft plans to join Libya’s Elephant project soon, the company’s deputy CEO Boris Zilbermints said.
"We are planning to join the Elephant project in late summer but we don’t plan to invest much, except the entrance fee because the project has already been launched. We are currently negotiating with several other asset owners in Libya," Zilbermints said.
Gazprom Neft sees West Africa as a very interesting region due to its exclusive tax regime which all other states have cancelled, Dyukov said.
Last Friday, another top official of Gazprom, Alexander Medvedev, also told local media in Moscow that, the company was planning to join the Elephant oilfield in Libya in an asset-swap deal with Italy’s energy company Eni this fall.
Under the deal, Gazprom is to take half of Eni’s stake in the deposit or a total of 33% in the project. In exchange, Eni will be allowed to take part in projects to develop northwest Siberian assets owned by the Arctic Gas company.
The Elephant oilfield, which has recoverable reserves of around 700 million barrels, is located in Murzuq Basin in the south-western Libyan desert, about 800 km (465 miles) south of Tripoli. The deposit, also known as the El Feel oilfield, was discovered in 1997.
KKK/daj/APA 2010-06-30
AlaskaDispatch: Alaska's futuristic pipeline is on a wild ride
Jill Burke | Jun 29, 2010
Alaska's hope for a natural gas pipeline is about to be in the hands of a hungry energy market. The Alaska Pipeline Project and its nemesis, Denali: the Alaska Gas Pipeline, are this summer offering open seasons, the period during which shippers make binding commitments totaling billions and billions of dollars to buy decades' worth of transit capacity.
"At the end of the day only one gas pipeline from Alaska will be built, and the market will decide," said Dave McDowell with the Denali project.
Recent chatter in the media world has called into question whether McDowell's employer and its foe might be looking to become friends. (On this note, it's also worth remembering the competing projects have pitted Alaska's major oil producers against one another. BP and ConocoPhillips are the parent companies to Denali and a purely private venture, while Exxon Mobil has joined forces with TransCanada to participate in the Alaska Pipeline Project, which is sponsored by the state by way of an exclusive license giving it access to lucrative state-offered incentives.)
Could it be the antagonists are surreptitiously forging an amicable future?
A blog entry in the energy section of the Houston Chronicle Monday cites "a source familiar with the project" that says the two sides are exploring whether to team up and questions whether "BP's growing financial burden from the Gulf of Mexico oil spill may be hurrying along the process."
Yet by the time Dow Jones picked up the "merger" rumor later in the day Monday, Denali's spokesperson was denying talks the rivals were getting cozy, as did an executive from TransCanada.
On this same front, Alaska's allure appears to be intensifying the desires of a Russian investor. On Friday, Russia-based energy giant Gazprom reiterated its interest in Alaska, and specifically in the Denali Project, following a presentation to shareholders. But whether Gazprom is formally in the works as a potential partner is anybody's guess. Mum's the word from Denali and ConocoPhillips, as both companies cited confidentiality and an unwillingness to comment on rumors and speculation when we sought more information about Gazprom's remarks.
The competitors do agree on one thing, however: that pipeline customers are likely to bring offers with strings attached. Buyers of capacity in any pipeline are expected to demand certainty about the state's tax structure, as well as reassurances that undeveloped resources, like those at Point Thomson on Alaska's North Slope, will be brought to market.
Contact Jill Burke at jill(at)
Bne: Ukraine to insist on control in Naftogaz/Gazprom merger
bne
June 30, 2010
Ukraine will insist on a controlling stake in any interstate joint-ventures in strategic sectors says Fuel and Energy Minister Yuriy Boiko, according to Interfax. The statement suggests renewed resistance to Russia's bid to gain a foothold in Ukraine's gas transport system, as well as the country's nuclear industry.
Speaking to the Uriadovy Kurier newspaper, Boiko said: "Russia's proposal is to create joint ventures on a parity basis. Not only in gas, but also in the nuclear industry. Our position is to control strategic industries; the Ukrainian side should get 51% [in joint ventures]."
Shortly after April's deal between the two countries, which saw Ukraine receive a huge discount on gas supplies from Gazprom whilst Russia's Black Sea Fleet extended its lease at the Sevastopol navy base, Russian Prime Minister Vladimir Putin proposed a merger between the respective state gas companies: Gazprom and Naftogaz. At the time, Ukrainian President Viktor Yanukovych said that he would not agree to a merger between Naftogaz and Gazprom unless it happens on a parity basis.
Russia's motivation for such a deal is the regular problems it faces in getting gas to its major customers in Europe. If it can get control of Ukraine's transit system, it will be able to guarantee deliveries and free itself of the leverage that Belarus and Ukraine - as the twin transit countries to the EU - currently enjoy in their relations with Moscow.
Russia has recently hinted that it could reroute south stream - a gas pipeline set to carry Russian and Central Asian gas to hubs in the south of Europe - through Ukrainian waters in the Black Sea, which would offer Kiev significant transit revenues. For its part, Russia is spending billions building two underwater pipelines to Europe to bypass Ukraine and Belarus.
Ukraine's new leadership has been extremely friendly towards Moscow, and signed several deals (the gas discount, a $2bn loan etc.) which have helped significantly whilst the country is struggling fiscally. However, the opposition claims that Kiev is sacrificing its independence in the numerous commercial deals that are now emerging in the wake of the gas discount.
The gas transit system is a vital strategic asset in Ukraine's relations with both Russia and Europe. Any deal ceding control of the system would likely raise noisy accusations of selling out to Moscow.
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